May 9th, 2017

Myths of Retirement Planning

myth and reality word cloud

Many people make mistakes in their retirement planning because they believe in one or more myths about retirement.
Myth #1: “I’ll need a fixed-income for only 10 to 15 years.” Unless you have a short lease on life, it is better to assume you will be living to at least age 85.
Myth #2: “My living expenses will be lower.” Do you expect your lifestyle to drastically change? Besides some commuting expenses and daily lunch money, what else do you plan on cutting out? Consider all the things you’d like to start doing and figure out the costs.
Myth #3: “Social Security will replace a portion of my pre-retirement earnings… and it won’t be taxed.” The greater your pre-retirement earnings, the less you should count on Social Security. It favors lower wage earners. And, if you have a pension and substantial income-producing assets, there is a strong possibility that 50–85% of your Social Security benefits will be taxed.
Myth #4: “I’ll be in a lower tax bracket.” Just because you’ll have less income doesn’t necessarily mean that you’ll be taxed at a lower rate. It’s important to figure out how much your income will be and then look at the tax tables. It’s an essential part of your pre-retirement planning.
Myth #5: “I can wait until I retire to decide how and where I’m going to live.” The key is to start planning before you retire. The worst time to make a decision is when you’re forced to make one. Having a general idea of where you’d like to live allows you to make the appropriate changes in your retirement strategy. For example, buying property when interest rates are lower can make the difference between you being able to qualify for and maintain a mortgage, or not.
SUGGESTION: If you can, and conditions are right, consider buying property prior to retiring. You may have a better chance of securing a mortgage if you’re still working and your income is higher.
Myth #6: “I won’t be financially responsible for my parents or children.” Don’t fool yourself. Take a good look at your family. How are your children financially? Will you have elderly parents dependent on you? Will you be a member of the “sandwich” generation (people taking care of both their children and their parents)?
Myth #7: “My company will continue to provide me with retiree health benefits.” Unfortunately, this is not true. More and more companies are looking to scale back or eliminate health benefits for retired employees. Make sure you understand your employer’s policies on retired employees.

*Securities offered through INFINEX INVESTMENTS, INC. Member FINRA/SIPC. ENB Money Management is a trade name of the bank. Infinex and the bank are not affiliated.
NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • NOT FEDERAL GOVERNMENT AGENCY INSURED • MAY LOSE VALUE

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