After 35 or 40 years of paychecks, you might be counting the days before you can leave your job for good. However, your idea of what lies ahead in retirement years may be far different from reality. You need to be prepared for the fact that life as a retiree may not follow the script you wrote in your head.
Here are five myths about retirement that catch many retirees by surprise:
Retire-Myth No. 1
Every day is a free day. Waking when you like, drinking coffee in the sunroom and puttering around the house to your heart’s content may be your retirement dreams, but the truth is that those visions are not what the retirement lifestyle usually turns out to be. Daily calendars quickly fill up with hobbies, family events, volunteering and travel. Today’s retirees also face the issue of longevity. They may experience as much time in retirement as they spent in their career, and a long-term life of leisure doesn’t fulfill everyone. As a result, a third phase of life — balancing recreation, giving back to the community and work — is becoming the norm.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Retire-Myth No. 2
Retiring will be a breeze. Some people find the prospect of leaving the workforce scary and disorienting. Retirement is a transition that is a complex and emotional experience for most, with complete shifts in not just your daily routines, but your identity as well. The titles and workplace roles that identify you as a productive person are gone, and self-esteem requires adjustment. Having a plan for how you will spend your time is one way to minimize the stress of settling into a new schedule. If you don’t plan for it, gliding through a happy retirement is not very likely.
Retire-Myth No. 3
I will retire at the magical age of 65. This artificial benchmark was more accurate when traditional pensions and Social Security were paying full benefits at 65 and lifespans were much shorter. According to the 2015 Retirement Confidence Survey from the Employee Benefit Research Institute, retirement happens earlier than expected for half of retirees. Sixty percent of those leave due to health issues, and others leave because they were let go due to downsizing or had to quit to care for a family member. The earlier you begin planning your retirement, the more prepared you will be should life throw you a curve ball and your retirement dream date change.
Retire-Myth No. 4
Pensions and Social Security will fund my retirement. Today, 401(k)s, not pensions, are the norm. The big difference is where the burden of funding and investment risk lies. 401(k)s are largely funded by the employee and, unlike a pension, there is no guaranteed monthly income at retirement. Social Security benefits were designed to be a supplement to retirement plans and individual investments, not the primary resource.
Retire-Myth No. 5
I will spend less when I retire. A common adage is that you will only need 70% to 80% of your pre-retirement income during retirement. The truth is that estimating the percentage needed is complex and unique to each individual. Interestingly, according to the Employee Benefit Research Institute, 52% of retirees surveyed spent 95% or more of their pre-retirement income during retirement. The question becomes, will your nest egg support you through 25 or more years in retirement?
-
How Your 2025 Summer Wedding Could Save You Money on TaxesTax Breaks There are some wedding expenses that are tax-deductible, and you don’t want to miss out on savings.
-
Are You Supporting Multiple Generations in Retirement?Here’s how to support your parents and your adult children without sacrificing your retirement.
-
What the OBBB Means for Social Security Taxes and Your Retirement: A Wealth Adviser's GuideFor Americans in lower- and middle-income tax brackets, the enhanced deduction for older people reduces taxable income, shielding most of their Social Security benefits from being taxed.
-
Financial Planner vs Investment Manager: Who's the Better Value for You?When markets are shaky, who do you trust with your money? A recent study provides useful insights into the value that different financial professionals offer.
-
I'm a Financial Adviser: This Is How You Could Be Leaving Six Figures in Social Security on the TableClaiming Social Security is about more than filing paperwork and expecting a check. When you do it and how you do it have huge financial implications that last the rest of your life.
-
The Big Pause: Why Are So Many Americans Afraid to Retire?While new research sheds light on Americans' growing reluctance to quit work in later life, can anything be done to help those with the retirement jitters?
-
Five Under-the-Radar Shifts Investors and Job Seekers Can't Afford to Ignore Under the OBBBBeyond the headlines: The new tax law's true impact for job seekers and investors lies in how it will transform industries and create opportunities in areas such as regional accounting, AI and outsourced business services.
-
I'm a Financial Professional: It's Time to Stop Planning Your Retirement Like It's 1995Today's retirement isn't the same as in your parents' day. You need to be prepared for a much longer time frame and make a plan with purpose in mind.
-
An Attorney's Guide to Your Evolving Estate Plan: Set-It-and-Forget-It Won't WorkWhen did you last review your will? Before kids? Before a big move? An update is essential, but regular reviews are even better. Here's why.
-
For a Richer Retirement, Follow These Five Golden RulesThese Golden Rules of Retirement Planning, developed by a financial pro with many years of experience, can help you build a plan that delivers increased income and liquid savings while also reducing risk.
