Debunking Common Retirement Assumptions
Financial generalizations are as old as time. Some have been around for decades, while others have only recently joined their ranks. Let’s examine a few.
Retirement means I can stop investing. In the past, retirement was viewed as an “end” in many ways. These days though, retirement is often seen as an opportunity to return to one’s passions or just another of life’s many chapters. That doesn’t mean you should stop investing. In fact, many ways people fund retirement is through investments such as real estate, bonds, and annuities.
I started saving too late, and now retirement is impossible. No matter how far behind you feel you are, don’t lose hope. Remember, you can make larger, catch-up contributions to your IRA after age 50. If you are 50 or older this year, you can put as much as $25,000 into a 401(k) plan.
Keep in mind, withdrawals from traditional IRAs and distributions from 401(k) plans are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. Generally, once you reach age 72, you must begin taking required minimum distributions.
Medicare will take care of me. Unfortunately, Medicare doesn’t cover extended care, if that’s the only care you need. Instead, extended care insurance is often the best choice when preparing for retirement. To learn more about protecting yourself against rising healthcare costs in retirement, click here/ check out our blog through the link below!
I’ll live on less when I’m retired. This depends on how you approach retirement. In the later phase of retirement, people often choose to live on less. But for many, the first few years of retirement mean traveling and new adventures. In other words, taking a realistic look at where you would like to be in retirement makes all the difference when it comes to retirement costs.
My taxes will be lower. That depends on your situation. Some may earn less in retirement, which could lower their tax bracket and may reduce overall taxes. On the other hand, some retirees may end up losing the tax breaks they enjoyed while working. For more insight into your tax situation in retirement, speak with your tax professional or schedule a free virtual financial strategy session to discuss how we can help reduce your tax liability.
At the end of the day, there is no “one-size-fits-all” retirement strategy. Every individual, couple, or family needs a strategy tailored to their situation, risk tolerance, and financial objectives. With proper preparation and the help of a trusted financial professional, there’s no reason you can’t create a strategy tailored to what life has in store for you. To learn what your ideal retirement plan may look like, click the link below, call 1-800-467-8152, or email email@example.com to schedule a free virtual financial strategy session.
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