Is everything you read about retirement on the internet true? If you’ve been browsing around, you’d have come across lots of information revolving around financial planning for your retirement. However, some of this information may be incomplete or incorrect. Since everyone’s financial situation is different, there’s no one-size-fits-all retirement plan that works for everybody. On the other hand, there are some retirement myths that you should ignore.
Myth 1: You Can Continue Working if You Don’t Have Enough Savings
While you can continue to work in your retirement years, some factors are beyond your control. Unpredictable changes to your health may hinder you from continuing your current job or seeking employment. There’s also a chance your company may restructure or downsize, putting you at the risk of being laid off. If you’re healthy and actively seek employment, it may also be challenging to find a job that offers the working hours and compensation you want.
Myth 2: You Need to Save a Specific Sum of Money
If you’ve come across articles that say you need to save a certain sum before you can retire, ignore them. No matter the amount, no one can guarantee that it’ll be sufficient. Instead, the savings you need should depend on your desired retirement lifestyle. If you intend to go on holiday trips and become a globetrotter, you’ll need to plan for travel expenses. On the other hand, if you prefer to live a simpler lifestyle, you’ll be incurring lower expenses. The amount of money you need to save should be calculated based on what you intend to do in your retirement years.
Myth 3: You’ll Spend Your Retirement at the Same Place
You’ve made calculations and know your mortgage will be paid off before you retire. Hence, you no longer need to finance your house in your retirement years. You have no plans on moving and intend to stay in your current home after you retire. However, life is full of unpredictability. You may decide to move in with your family and help look after your grandchildren or prefer to stay in a retirement community that provides round-the-clock medical care.
Myth 4: Medicare Will Cover All Your Health Care Costs
While Medicare may cover some of your hospitalization expenses, it does not help you pay off long-term medical care needs. If you require assisted living, you’ll have to fork out these senior living expenses on your own. It’s good to make sure you save enough to cover additional healthcare expenses. Planning ahead is important.
Myth 5: You’ll Pay Less Tax
This is a common misconception. You’re retired but it doesn’t mean you will qualify for the lower tax bracket. If you continue to receive the same income as you were working, you’ll still need to pay those taxes. Moreover, tax rates may also increase.
Myth 6: You Can Do Your Retirement Planning Later
Think it’s way too early to start saving for your retirement? If you want to have a substantial amount of money in your retirement years, it’s better to start early. Set aside a certain percentage of your monthly income and take advantage of compound interest. You’ll also have more savings should a rainy day occur.