Here are five common myths that you might want to keep in mind when mapping out your financial future.
1) I will be in a lower tax bracket when you retire.
- I don’t know about you, but when I retire I don’t plan on lowering my standard of living. And if you are thinking along the same lines, then your income needs to be close to what it is while you are working so you can keep the same standard of living that you are used to. Also, you might have your house paid off and your kids are all grown up and no longer living with you…so there goes the deductions you are used to.
2) Medicare will cover my healthcare expenses in retirement.
- Yes, Medicare will take care of a bunch of your healthcare costs, but did you know that average couple will be spend around $240,000 in retirement and that amount doesn’t include long term care. So make sure to plan ahead and don’t underestimate these costs.
3) My investment portfolio has performed well, so I’m just going to leave it the way it is.
- You may have had the right mix of stocks, bonds, mutual funds, etc. during your working years, but in retirement you no longer have a long term investment type approach. Make sure to speak with your financial advisor about allocating your investments in the proper way. If you don’t have an advisor, please give us a call and we can refer you to one in your area.
4) Inflation is nonexistent so I don’t need to worry about it.
- Yes, interest rates and prices have not moved much lately, but don’t expect that to continue. I’m sure you remember the crazy inflation days of the 70s and 80s. Consider an investment option like certain indexed annuities that can provide for increasing income to protect you from rising costs.
5) I’m not gonna live very long, so my retirement will not be very long either.
- Because of surgical advances and promising medical developments, you can expect you or your spouse to live to age 90 or beyond. And according to the IRS, if you are 65 and single, you can expect to live to at least age 86. So you need to make sure your retirement savings can last you a long time.