One of the main goals we all share is to retire one day. However, many people often believe certain misconceptions that stand in the way of preparing for retirement. When planning for the day you no longer must work ever again, it is important to have the correct information for your situation.
Myth #1: It’s Too Late to Start Planning and Saving for Retirement
While it is wise to start planning and saving for retirement early in your career, you should never assume that the ship has sailed. While you might have to continue working longer than your peers who started earlier, there is still time to save.
At the age of 50, if you start contributing at least an additional $1,000 per year, this will result in an additional $27,000 in retirement savings when you turn 65. You could also make additional contributions to your employer-sponsored 401(k) plan.
The sooner you start saving, the less you need to save monthly to fulfill your savings goals and make the process easier to achieve. Therefore, the longer you wait, the more you must save each month, which can make getting started and reaching your goal much more difficult.
Myth #2: My Cost of Living Will Be Reduced in Retirement
Although you may live a slow and modest life after you retire, you may spend the early years of your retirement living your life to the fullest, especially if you are in good health. You may want to travel to different countries, go on more adventures, and bring your family and friends along for the ride. Being able to do many of these things would mean saving more before you retire.
Myth #3: I Can Rely on Social Security and Medicaid for Retirement
Relying on Social Security income will not result in a financially comfortable life after retirement. According to the American Association of Retired Persons (AARP), the estimated average Social Security retirement benefit in 2022 is $1,657 a month.
In addition, the long-term care coverage from Medicaid and Medicare is limited, which means retirees may still have to pay for medications and other services (e.g., dental, vision, and hearing aid coverage) out of pocket.
Myth #4: I Do Not Have to Pay as Many Taxes in Retirement
While you will be placed in a lower tax bracket when you earn less from your investments than you did from your salary, the overall percentage of taxes you pay may remain the same. Furthermore, some tax breaks you were able to take advantage of during your working years will end. Lastly, local and state taxes often increase over time.
Myth #5: You Will Never Work Again
While retirement may convert full-time work to full-time leisure, many retirees are choosing to re-enter the workforce either in a part-time position or a career field they are passionate about. The truth is that many people live past the average life expectancy, which means living comfortably for 30 more years without earning additional income does not seem possible. Therefore, earning just enough to afford retirement can result in a more balanced lifestyle.
Discuss Your Retirement Options with Piermont Wealth Management Today
In conclusion, the more prepared you are for retirement, the better position you will be in to enjoy living out the rest of your life. However, no two situations are alike, so believing in retirement myths can be detrimental.
At Piermont Wealth Management, we can help you create a comprehensive and personalized retirement plan. We can thoroughly examine your income and finances, determine all your investment options, and help you fulfill your needs until it's time to retire.
If you need professional help with your wealth management in New York or Florida, call (888) 910-1666 or fill out our online contact form today to schedule an initial consultation!