3 Retirement Myths To Avoid Like The Plague
We all know how the story goes. Your mom and dad told you this a countless number of times, “You have to save for the future”.
Our golden age can come really fast and most of us don’t think about it until we start feeling old which is almost too late.
As with all things financial, there are good ways, and bad ways to retire. Planning for it is definitely important and you should know what is right or wrong.
With some research, some help, or just going to the right people, like the retirement planner in San Diego, you can start thinking about the future.
With that said, here are some of the most common myths and misconceptions about retirement.
Myth 1: It is too early to plan for your retirement
You just got out of college and are now seeking for the perfect entry-level job that will bolster a career that is gonna make you millions along the way.
After you get your first salary, you spend the night out with all your friends thinking, “This is my first salary, I will start to save next month”.
Then next month you see a fancy car and you splurge on the down payment then you think to yourself, “I am young. I will start saving when this car is fully paid”.
Then you realize that it is just one thing after another and you have to stop.
You got up and powered on your computer, wrote a simple spreadsheet with a row showing a hefty amount that you plan to save each month for retirement.
This is the case for most young people. And by the time he/she realizes the need for setting aside fund, a lot has already been lost.
You could be taught well by your financially aware parents and start saving immediately or your realization could come at the age of 60.
Unfortunately, people often use their parents’ lifestyle as the benchmark on how they plan on retiring.
You could say that you are satisfied with a two-story house with a yard and a minimal retirement fund you could spend for the rest of your years.
The problem with this thinking is that the money needed to make this happen is nowhere near the value you would need today.
With the inflation rate, crumbling economies, and generally rising population, that simple lifestyle you thought of could be nowhere near in sight.
In the US, studies showed that the working population, on average, start thinking about planning at the age of 38.
But based on average salaries, people need to start planning for retirement at 25 if they plan on retiring when they are in their early 50s.
And when you are on the lower income bracket, you have to plan even earlier.
Another interesting statistic is that only 30% of those over 38 are confident that they can get enough fund for their retirement.
This is why you will need a retirement planner San Diego.
Myth 2: You can plan your retirement on your own
You could have a degree in accounting and an MBA and still not be able to get a decent retirement plan.
You may have your trusty spreadsheet ready, but saving for a time a few decades from now will not be the same as saving for your next grocery list.
Inflation will devalue your money as the years go by. But the good news is there are many institutions that have drilled this exact problem’s solution into a science.
Many retirement planners, like the retirement planner in San Diego, will happily work out the kinks for you.
The only way to fight back is to build your future funds around smart investment decisions. This will not be easy.
You have to learn the market, be financially knowledgeable, and be investment savvy. It is easier said than done and the risk of losing all your money through bad investments is a real possibility.
Moreover, not all investments are the same. There are good and bad investments. The general rule is always trying to diversify your assets as a means to hedge your bets across your portfolio.
You should have low-risk investments, like say government bonds, and satisfy your appetite for risk by getting some risky but potentially big investments in your portfolio as well.
You should balance them to ensure that you will still be able to retire comfortably should the worst expected thing happens.
As mentioned earlier, you could acquire services of retirement planners. They can do the investing for you and offer you salaries and one-time checks when you are retired.
This makes it all simpler but you will lose most control of your money. These are long-standing businesses as well so the fear of them losing your money is a remote possibility.
Myth 3: Retirement is cheap
When you start factoring out the cost of going to work, clubbing, and other young, working people type of expenses, it is tempting to think that retirement is going to be substantially cheaper.
However, what people do not often realize is that retiring adds other expenses to your yearly budget.
- The main concern is medical help. The human body is expected to deteriorate at some point and it will be a challenge to remain healthy at that age.
- Your expenses also skyrocket when you have a family. Depending on how old you are when you get them, paying for your kids’ education is probably one of the most expensive things to do in America.
When you are still working. You put on hold plans to go traveling and seeing the world.
After your last day at work, this is all you will be thinking about and days of having nothing to do will only drive this wanderlust to an extreme.
Unfortunately, these trips don’t come cheap.
Final Word
Retirement is the time when you ought to do everything you could not do when you were still young. However, you have to make sure there is sufficient fund for it.
After all, no one wants to give that burden to the kids especially when they are just trying to find their feet.