Breaking down 6 common retirement planning myths

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Financial myths can make it difficult to plan your retirement - and then stick to that plan. When mapping out your retirement years, it's critical to have the right information.

Here are six common retirement myths dispelled:

Myth #1: I don't need to revisit my withdrawal rate

A standard withdrawal rate of 4% annually has been a popular concept for years and can help illustrate your options. However, there isn't a one-size-fits-all number. Figuring out the best retirement plan and withdrawal strategy should take into account your current finances, future income, goals and other considerations unique to you. What's more, your plan and withdrawal rate may change as your circumstances change.

Consider these approaches:

  • If you've recently retired or are nearing retirement: Regularly review withdrawal rates. This is a smart way to keep an eye on how current stock prices and the rate of inflation may impact returns in your investment portfolio. The ability to adjust your retirement income level based on market conditions and your circumstances can help you address uncertainty or the unexpected.
  • If you're young or mid-career: Planning for a 3% to 4% withdrawal rate may be reasonable over the long term.

Myth #2: Medicare will cover all health care costs

Medicare is a valuable program for many retirees, but it wasn’t designed to cover everything. For example, deductibles and copayments (which can be significant), as well as the cost of care for dental, vision and hearing conditions are not covered. In addition, coverage for nursing home and other long-term care is limited.

Consider these solutions:

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Medicare supplement insurance (Medigap)Medicare Advantage plansLiving benefits riderHybrid policies
From a private issuer - Can help fund remaining copayments, coinsurance and deductiblesFrom private companies who contract with Medicare - Can provide all your Part A and B benefits (excluding hospice); many plans also offer prescription drug coveragePart of a life insurance policy or annuity contract - Can enable you to advance part of the policy benefit to pay for expenses if you’re diagnosed with a life-threatening illnessCombines life insurance with long-term care benefits - May help you pay for the costs of a nursing home, assisted living or in-home care; can be more affordable than traditional long-term care policies

Myth #3: Social Security won’t last

Though the solvency of the Social Security program is an ongoing topic of conversation, if you’re in or nearing retirement, it is not likely to materially affect you.

Adjustments made to Social Security in 1983 have done a lot to improve the program's long-term viability; and changes (if any) will likely be gradual and phased in over time.

Keep in mind that Social Security alone cannot provide enough income for most individuals.

Myth #4: I can work for as long as I need to

Longer life spans may mean more years in retirement and possibly more years working past age 65. However, given the uncertainties of aging, it may not be realistic to expect to work as long as you need or want to. For example, half of all early retirements are due to illness or disability.

Myth #5: I’ll spend less (and pay less taxes)

Depending on your goals, you may be spending more in retirement than you thought you would, especially if you are travelling, visiting children and grandchildren and pursuing new hobbies and activities. Additionally, inflation can erode your purchasing power over time.

Another related misconception is that you'll pay less in taxes once you're retired. But that assumes you'll have less income. If you end up with the same amount of income in retirement as you had when you were working, you may not be in a lower tax bracket. Also, you may qualify for fewer tax breaks such as mortgage and college savings deductions. Tax rates may also rise in the future.

Planning for retirement: How to balance your income and expenses

Your Ameriprise financial advisor can help you turn your assets into a stream of income that is designed to last throughout retirement.

Learn More

Myth #6: I'll live in the same place throughout my retirement

You may think that by the time you retire, your mortgage will be paid off and your housing costs will be set. However, moving is often a reality during the retirement years. For instance, you may decide to move closer to family members or into an urban area for the culture and convenience. You may find you need an assisted living situation or a community with more transportation and maintenance services at hand.

We’re here to help with your retirement planning needs

You’ve worked hard to save for retirement – and deserve to enjoy it with peace of mind. As you plan for these years, know you can lean on an Ameriprise financial advisor for personalized advice based on your goals and needs.

Click here to find an advisor


Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consult your tax adviser or attorney regarding your specific situation.


Investment products are not insured by the FDIC, NCUA or any federal agency, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. Ameriprise Financial Services, LLC. Member FINRA and SIPC.


Ameriprise Financial Services, LLC. Member FINRA and SIPC.


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1 From an Ameriprise report for retirees, “Planning for a more confident retirement,” published April 2019.