I really enjoy these slideshows from Money but I almost wish they’d just list everything on one page and not force me to click through each one. In this particular edition, Money highlights thirteen Retirement Myths and I think it’s worth checking out. Here they are in summary:
Myth 1: You need a big income to have a big nest egg
Myth 2: You can’t get rich with a 401(k)
It’s like the old fable with the tortoise and the hare, it’s not all about flash… it’s about slow and steady winning the race and with a 401k and a diligent savings plan, you can retire wealthy.
Myth 3: Everyone has debt
This is definitely not true, debt is your worst enemy in retirement because it taps into your fixed income. Avoid debt at all costs and don’t assume everyone has it.
Myth 4: A million dollars will cover you
A million used to be great, then there was this little bug we call inflation… now a million isn’t worth quite so much anymore.
Myth 5: Boomers will crash the market
The idea behind this myth is that Boomers in retirement will cash out their shares and the market will tank. The reality is that the top 10% in wealth hold 68% of the stocks, it has nothing to do with age.
Myth 6: Without a pension, you’re doomed
Plenty of people don’t have pensions; you should plan for every contingency.
Myth 7: Social Security won’t be there
Hmmm… I’m a believer in this “myth” and the explanation given is a little weak; essentially it’s workable until 2081 and Congress has to move on this to stop the spigot from running dry.
Myth 8: Your house can finance retirement
It’s easy to fall into this trap, don’t; downsizing might not get you enough to retire so make sure you’re financially set elsewhere first. It’s a great supplement, but can’t be the main vehicle.
Myth 9: You’re too old to start saving
You’re never too old to do anything.
Myth 10: Short-term market swings don’t matter
When you’re close to retirement, it’s the short term that matters and not the long term.
Myth 11: Top priority is the kids’ college
The problem with this is that if you tap into your retirement funds for your kids’ sake, you’ll have to rely on them in retirement. Education is important but your kids have a lifetime to pay for their education whereas you don’t have that luxury. It’s a hard decision to make but it’s one that’s necessary.
Myth 12: Decent savings plan = early retirement
Savings are great and certainly an important part of a personal finance life plan, but that doesn’t necessarily mean that a good savings plan equates to early retirement. The fact of the matter is that you should be adding a whole host of other things to that decent savings plan, such as retirement planning through consultation with experts and choosing the right funds in your retirement accounts.
Myth 13: You’re bound to mess up your 401(k)
If you are thinking this way, you need to start changing your brain.
There they are… the thirteen retirement myths.