Looking for the right retirement community may be challenging, but living in retirement may be even tougher. That’s why it’s crucial to avoid being misled by the increasing number of rumors about retirement. These include the difficulties in preparing for and living in a financially comfortable environment.
Keep in mind that no matter how many years you are from living in a nice retirement community, it’s essential to come up with a feasible plan to finance it.
Here are three of the most common misconceptions about retirement:
Myth # 1 Retirement means fewer expenses
Studies reveal that people tend to spend more in retirement than they do while still employed, especially in the first few years. The rule of thumb, as most experts say, is to save about 70 to 80 percent of the retiree’s retirement income to maintain the lifestyle they’re used to. How much you should plan to save and spend will depend on how you currently manage your finances. If you tend to spend your income more and you don’t expect to own your home after retirement, you may need all of your pre-retirement income to maintain your current living standards.
Myth # 2 Social Security will carry you through retirement
Some people don’t save much for retirement during their careers thinking that Social Security will back them up. Social Security, however, is designed as a safety net and not a primary source of income for retirees. Also, applying for benefits at age 62, the eligible age, will entitle retirees to monthly checks immediately. The drawback is that the benefits will be 25% less compared to what you will receive if you had waited until your full retirement age.
Myth # 3 Working part-time in retirement will make up for a savings shortfall
It’s increasingly becoming common for people to work even beyond the traditional retirement age of 65. Counting on employment to fund your retirement at this age, however, is not the best option. You need to have a concrete plan while disregarding the idea of working into your 60s. After all, over half of early retirements are due to unexpected reasons, such as health problems and disabilities, downsizing or economic changes.