As an individual, you’re unique — and so is your retirement plan. Yet many Americans continue to believe some common retirement myths that have the potential to derail or negatively impact one’s future.
Myth: You only need to plan for retirement. Once you retire, the work is done.
It’s best to think of your retirement plan consisting of two distinct phases: your accumulation period leading up to retirement and your distribution period during retirement. As you prepare, your efforts are focused on accumulating assets through prudent saving and investing. Then as you near your target retirement date, both your mindset and habits undergo a significant shift as you concentrate on sensible, sustainable spending.
Myth: Social Security and Medicare will take care of you.
This line of thinking is especially dangerous because it demonstrates a lack of understanding of these government plans, can encourage procrastination and creates unrealistic expectations. Social Security was designed to only provide a minimal safety net for seniors, not to fully replace the cost of a comfortable lifestyle. Plus, Medicare has notable shortcomings including the infamous “donut hole” for prescription drugs. Treat these programs as supplements, not cornerstones, to your total retirement plan.
Myth: You don’t need to worry about retirement if you plan to keep working.
On the one hand, this notion comes from a good place. There are many benefits associated with working during traditional retirement years: maintaining mental sharpness, avoiding social isolation and continuing to earn income. And while research indicates that 50 percent of people expect to keep working past age 65, less than 15 percent actually do so. Life is uncertain, and planning for retirement well in advance can cushion the blow of unforeseen medical conditions or other factors that could impede or cut short your intended working years.