What's the truth about retirement planning? There are many myths about retirement, including the belief that social security will be enough to provide income during this time. However, social security was only designed to meet your basic needs during retirement. If you are currently earning over $100K in salary, it is estimated that social security will only cover 25% of the retirement income you will need.
This blog will discuss other retirement myths and provide some insight to consider when planning for your retirement.
Myth 1: "I will pay less taxes during retirement"
Retirees will only experience a lower tax bracket if their income is lower in retirement. However, if the tax rates continue to rise and your retirement income is still significantly high, then you could actually end up paying more in taxes during retirement.
Myth 2: "While living in retirement, my housing costs will be less"
Even if you do not have a mortgage during retirement, property taxes and maintenance can still continue to rise. According to the Bureau of Labor Statistics people 65 and older spend a greater amount on housing (31%) than those between ages 45 and 64 (27%).
Myth 3: "It’s harder to save for retirement as a self-employed person or small business owner"
Unfortunately, many people only equate saving for retirement with a corporate 9 to 5 job. However, there are many retirement plan options for self-employed persons and small businesses that can be utilized to save for retirement and that are easy to setup for the owner, as well as, their employees. It is suggested that business owners treat their retirement contributions as a necessary business expense.
Retirement myths causes poor planning that can result in catastrophic financial outcomes for retirees. In addition to believing myths, there are also key questions that are often ignored when planning for retirement:
How many years of retirement should your plan cover?
In past years it may have been sufficient to save enough money to last at least 10 to 15 years in retirement. However, since the average life span is 80 years or more, saving for at least 25 years in retirement is more realistic.
Should I continue to work during retirement?
Many retirees continue to work during retirement. Working and continuing to save your money will add to your savings and allow you to live even more comfortably during this phase of your life.
Charged with better facts about retirement, it's time to start planning. Check out our free e-book to get you started:
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