Planning for something which is stretched out far away in the future is not always a top priority in most people’s list. This is true in case of retirement too. I have seen too many people taking a casual approach to retirement planning because of the various myths they hold about retirement.
Myth #1: It is too early to even think about retirement
Life expectancy of people is on the rise and the retirement phase is only getting longer. For many individuals they could be retired longer than they worked. Hence young earning individuals need to realize they need to not only “live” today but plan and save money for their retirement needs. Retirement planning should begin from the point in time you start earning your living. The later you begin the more challenging it becomes for you to plan for retirement.
Myth #2: Medicare will help me meet my retirement spending
There is no doubt that healthcare expenses are a major part of the overall retirement expenses and Medicare does help retirees. According to the Kaiser Health Foundation, Medicare traditionally has provided only 48 percent cover for the health costs for a variety of reasons. There are some routine health care costs which Medicare does not cover and these include costs related to eyeglasses, dental treatment or hearing aids. These expenses sometime run up in thousands of dollars. Medicare also does not reimburse 100 percent of the healthcare expenses and retirees still have to pay the deductibles. In order to meet these expenses, retirees have to opt for an additional insurance policy which is popularly known as Medigap policy.
Myth #3: I can get another job during retirement
When young, you are energetic and healthy, and there is a tendency to get carried away and convince yourself not to think about working after retirement. But as you approach retirement age, things are not the same and you feel differently. You find the daily routine tasks to be exhausting and you would want to be free from these responsibilities. Forcing yourself to work during retirement really takes away from the charm of retired life. When retired, you ideally want to be able to use your time for things you were too busy for before. Also, there is the reality that once you’ve reached retirement age, job openings will be shorter and unappealing.
Myth #4: Expenses will be far less when I retire
One of the most important prerequisite about retirement planning is correctly estimating how much you should have saved. It is true that your everyday work expenses are no longer an issue but most people underestimate living expenses. While some expenses are no longer, other expenses arise which weren’t important before.
A lot of retirees put off traveling until they are in their “golden” years. Travelling costs never go down, only up. Medication not needed before can become an expensive issue. Also more and more grown children seek “assistance” from their retired parents.
At Self Directed Retirement Plans LLC, we establish true checkbook controlled self-directed plans. With these plans, our clients can take advantage of many alternative investments to help them reach their retirement goal. We also educate our clients how Roth can work to their advantage. Retiring with a tax free income stream is very possible if started early and correctly.