Retirement MythsThis older article from Smart Money immediately caught my eye as a fresh look at common advice and information regularly preached to retirees. The problem with standard advice is that it often relates to the “average” person.  No one is average- everyone is unique and watered down tips aren’t a fit for everyone.

You, as an individual, will deviate from that average profile in a unique way. The average is just a number but you are a person with a very specific set of needs, desires and financial objectives.

This article attempts to shed a new light on a few of the retirement myths out there. This is a chance for you to pick apart some widespread beliefs and make up your own mind.

Myth #1: $1 Million will be enough

Many advisors recommend planning to accumulate a specific level of assets before retirement and then project annual spending rates. Whether the target level of assets never materializes or spending projections are inaccurate, several surprises can come from assumptions that have very real implications.

Myth #2: Spending will decrease in retirement

Are statistics that show retirees spend less born from necessity or choice? It is true that expenses related to work and raising children disappear in retirement but leisure time is what retirement is all about. You’ll have more free time to pursue passions you didn’t have time to do while you were working. Do you really need less money?

Myth #3: Retirees need bonds

Common knowledge suggests that retirees move to bond-rich portfolios. With the 2008 market crash leaving so many people a few years behind targets, reality suggests retirees will need the growth in stocks to achieve measurable results throughout retirement.

Myth #4: You’ll save money if you move

I can’t tell you how many articles I’ve read that suggest people move to a cheaper area for their retirement years. While there is some truth in the numbers, it’s worth considering some of the extra expenses you may incur if you leave your hometown.

Myth #5: Medicare will take care of all medical expenses

Many routine, preventive procedures are not covered by Medicare. Some things may be considered luxuries such as periodic eye exams or dental care so you’d better plan to pay out of pocket for plenty of medical-related expenses. Gap coverage or long-term care insurance can be used to limit your financial exposure to unexpected medical costs in retirement.

What other expectations do you have for expenses and portfolio performance in retirement? No matter what your answer is to that question there remain many more issues to plan for than most people realize. Some you can control and some you can’t.

My advice is as consistent as always: by planning for what you can control you’ll limit the negative effects of the things you can’t control. You are not an ‘average’ so making necessary preparations is a process unique to your situation. Make sure to seek help from someone who can identify all areas of concern and offer viable solutions.

 

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