Common Retirement Planning Myths

For those who don’t make sensible plans, dreams of a trouble-free retirement can be a myth. Just 20 years after Columbus discovered America, Spanish explorer Ponce de Leon sought the mythical fountain of youth. However, as Ponce and everyone has since discovered, there’s no actual fountain that brings back youth.
Therefore, we must plan for what inevitably happens in our later years.

Expecting to find the mythical fountain and a trouble-free retirement are not the only mythical wishes older workers mistakenly believe.   

1. No need to start early planning myth: While you’re young and pursuing your career and enjoying life, it’s natural to believe there’s plenty of time to begin thinking about retirement. Actually, that’s the best time to start your planning. With current turbulent economic conditions, many factors of retirement security are not so secure today.

Expectations of staying with the same company long enough to earn a pension are uncertain. Depending on adequate Social Security to supplement pensions is also a questionable situation. The only way to assure retirement income is to start early with regular savings and sensible investments.   
2. Financial freedom myth: You believe you’ll be able to enjoy an adequate retirement income from a combination of pension and Social Security. So did many people who retired 20 years ago who didn’t account for the creeping inflation rate that has averaged at least three percent each year since. That comfortable retirement 1991 dollar is worth 40 cents today.

3. Reverse mortgage myth: So-called financial advisers appeal to cash-strapped seniors with offers of reverse mortgages on their paid-up homes. The deal sounds ideal. You get enough of a monthly stipend to pay your living costs for as long as you live, and then ownership of the home reverts to the lenders.

You get better odds in Las Vegas, because the lender is betting on statistics that you will die within a few short years. In that way, their investment will pay off with a valuable house obtained at a bargain price. Unless you have absolutely no heirs, reverse mortgages are bad bets.

4. Good health myth: Healthy new retirees are usually optimistic about going into retirement. They believe they’ll be able to maintain their usual lifestyle while enjoying trouble-free travel, exercise, relaxation and other freedoms indefinitely.

Unfortunately, Mother Nature has different ideas, and every retiree must face declining health, loss of mobility and all the other problems of advancing old age. An important task of retirement planning is to be sure there is enough money, beyond pension and medical coverage, to take care of the inevitable final years.  

5. Family help myth: Those retirees who have close, loyal family members to assist them are fortunate. Even with adequate income, elderly people often require assistance in shopping, home chores and other daily needs.

Depending on family comes with an emotional price to those willing to help their elderly members. As retirees become more dependent, family helpers must often spend time on them that should be devoted to their own families and living their normal lives.

Insurance programs and funding for eventual assisted living care or nursing home living should be an integral part of retirement planning.

Retirement planning should start early in everyone’s career, and continue building until the day when working days are over. Facing reality, instead of all the myths about that inevitable time, will be the solid basis for meaningful and trouble-free golden years.