Retirement is one of life’s milestones that requires long term planning and preparation. Because of the magnitude of this milestone, many believe certain myths or misconceptions that can ultimately hinder their financial security and long term financial independence. Let’s debunk ten common myths about retirement savings.
Reality: Social Security is a valuable source of income in retirement, but it should not be relied upon as the sole source of capital. Additionally, Social Security is taxable income, so a percentage of it will be returned to the government, reducing the overall amount you acquire.
Reality: The earlier you start saving for retirement, the better. Waiting until your golden years to start saving can make it more difficult to accumulate enough wealth to support your retirement lifestyle.
Reality: While the importance of paying off your debts cannot be overstated, it’s also crucially important to save for retirement. It is important to balance both goals by creating a budget that includes debt payments and retirement savings.
Reality: People often assume they’ll simply spend less in retirement, but this isn’t always the case. It is difficult to lower one’s quality of life, even more so in a person’s later years.
Reality: While working in retirement can help supplement your income, it’s not a guarantee. Any number of factors that prevent you from working, so it’s important to save for retirement regardless.
Reality: Just as it’s never too early to start saving for retirement, it is likewise never too late. even if you’re behind on your savings goals. There may be catch-up contributions available for those over 50, and if you can afford to, you can even increase your savings rate to help make up for lost time.
Reality: Investing aggressively may sometimes lead to higher returns, but it also comes with substantially higher risk. It’s important to balance risk and return with your retirement goals and risk tolerance, and always consult a qualified financial professional prior to investing.
Reality: Retirement savings should be viewed as a long-term goal, as opposed to a short-term one. It is important to save consistently over the years to accumulate enough wealth to support your retirement lifestyle.
Reality: Retirement savings is also about investing wisely. Diversifying your portfolio, managing risk, and balancing return with your goals are all important considerations.
Reality: While receiving an inheritance can be helpful, it’s not a guarantee. It’s important to plan and save for retirement independently, as relying on an inheritance can be a risky strategy.
Retirement is not only a goal, but a lifestyle. Preparing, planning and saving what you can for this latter period of life can help you sustain your golden years that are truly golden.
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