Five Retirement Myths vs the Reality

Believing these myths about your retirement could set you down the wrong path. Separating fact from fiction can help you approach your retirement with confidence.

By Tony Drake, CFP®, Investment Advisor Representative

published 23 February 2025

in Features

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Retirement is a phase of our lives that many look forward to. It’s a time to relax and enjoy all the hard work it’s taken to get there. However, there is a lot of retirement misinformation out there and it’s important to make sure you’ve got all the facts. Here are a few myths I have encountered while helping clients plan for their golden years.

Myth No. 1: You can’t retire until you reach age 65

One of the biggest retirement misconceptions I have seen is that you have to wait until age 65 to retire. For many years, 65 was the traditional retirement goal. But today, retirement can happen at any age, as long as you plan for it the right way. Many people may choose to work until 65, either because they need to continue building their savings or simply because they enjoy their career.

Try not to focus on your age when thinking about retirement. Focus instead on your income and whether you can fully rely on it for the rest of your life. Finding the right savings strategy for you and your family and creating a solid financial plan can help you reach your dream retirement.

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Myth No. 2: I should plan for a 10-year retirement

If you’re lucky, your retirement will last many years and be filled with relaxing days and time with family and friends. But how do you plan for retirement when you’re unsure how long it will last? Americans are living much longer than they were decades ago. According to the Social Security Administration, the average life expectancy for a man reaching age 65 on April 1, 2024, is 84.2. For women, it’s 86.8. Many people could live past those ages, into their 90s or even 100s. This means that if you retire at age 60 and live to 100, you could have a 40-year retirement. That could be as long as your career was!

While it would be much easier to plan if we knew exactly how long we were going to live, it doesn’t work like that. When planning for your retirement, it is always good to plan for too much rather than too little. You don’t want to get toward the end of your retirement and have to start working again because you ran out of funds. This is why I tell my clients that the sooner you can start saving for retirement, the better.

Myth No. 3: Medicare will cover all of my health care needs

Despite what many people think, Medicare doesn’t always cover all of your medical needs. While it can provide valuable health insurance for retirees, it wasn’t designed to cover everything. It does not cover all medications or forms of care, such as nursing homes and long-term care. It also does not cover vision or dental, an essential part of most retirees' medical needs.

As retirees age, their medical costs will get more expensive. The 2024 Fidelity Retiree Health Care Cost Estimate found that a 65-year-old will spend an average of $165,000 on health care expenses in retirement. To help prevent yourself from having to tap into your savings for medical costs during retirement, there are a few options you can utilize. Start contributing to a health savings account (HSA). You can use these funds for many insurance premiums in retirement. Planning for long-term care and other medical expenses not covered by Medicare is an important part of a comprehensive retirement plan. Consider purchasing long-term care insurance. For many retirees and their families, having a long-term care plan can help with some of the financial, emotional and physical burden of providing and paying for care.

Myth No. 4: Expenses will decrease in retirement

While many expenses, like gas or work clothes, may decrease in retirement, some expenses will actually increase. Are you planning on traveling during retirement? Those expenses could easily go up because you have more flexibility and time to travel. As I mentioned above, your medical costs may increase as well since Medicare will not cover everything. Health care could become one of your highest expenses in retirement if you don’t plan for it. Also, when you plan for retirement, make sure you factor inflation into your expenses. A good rule of thumb is to overestimate your expenses wherever you can, so you can put aside more than you think you need. Having extra is always better than not having enough.

Myth No. 5: I’ll be in a lower tax bracket when I retire

Your income may decline when you enter retirement, resulting in a lower tax bracket. However, if you have a lot of money in tax-deferred retirement plans subject to required minimum distributions (RMDs), then you could actually see your income increase. This could result in higher income taxes, which you need to plan for. Most retirees will stay in the same tax bracket when they retire, and if they do move to a lower tax bracket it’s usually only by a few percentage points.

Retirement planning doesn’t have to be confusing or hard. Believing these retirement myths could set you down the wrong path. By taking the time to separate fact from fiction, you can approach your retirement with confidence. It’s important to sit down with a financial adviser who will be able to answer any questions you may have.

Drake & Associates is an independent investment advisory firm registered with the U.S. Securities & Exchange Commission. This is prepared for informational purposes only. It does not address specific investment objectives, or the financial situation and the particular needs of any person who may view this report. Neither the information nor any opinion expressed it so be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice. The information cited is believed to be from reliable sources, Drake & Associates assumes no obligation to update this information, or to advise on further development relating to it. Past performance is not indicative of future results. Registration as an investment adviser does not imply a certain level of skill or training.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Tony Drake is a CERTIFIED FINANCIAL PLANNER™ and the founder and CEO of Drake & Associates in Waukesha, Wis. Tony is an Investment Adviser Representative and has helped clients prepare for retirement for more than a decade. He hosts The Retirement Ready Radio Show on WTMJ Radio each week and is featured regularly on TV stations in Milwaukee. Tony is passionate about building strong relationships with his clients so he can help them build a strong plan for their retirement.