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Common Retirement Myths Debunked

Retirement planning research encompasses a variety of areas, focusing primarily on the strategies, tools, and financial techniques used to ensure financial security and stability during retirement.  There are many outlets for information regarding retirement, some of which may be misleading or incorrect.  Here are some common retirement myths that are not as true as you might think.

Social Security Will Be Enough for Retirement

Social Security is designed to replace only a portion of your pre-retirement income.  Depending on your lifestyle and expenses, it is unlikely to be sufficient on its own.  The average replacement rate is about 40% of your average working wages, which is below the 70-80% that many financial planners suggest is needed for a comfortable retirement.  Supplementing with personal savings, pensions, and retirement accounts such as a 401(k) or IRA is important.  Contributions to a traditional 401(k) are made with pre-tax dollars, reducing your current taxable income.  The earnings in a 401(k), grow tax-deferred, meaning you don’t pay taxes on the gains until you withdraw the money in retirement. Contributions to a Roth IRA are made with after-tax dollars and allow for tax-free withdrawals in retirement, whereas contributions to a Traditional IRA are often tax-deductible in the year they are made, but withdrawals in retirement are taxed as ordinary income.

You Can Wait Until Later in Life to Start Saving for Retirement

The sooner you start saving, the better.  One of the most powerful reasons to start early is the benefit of compound interest.  The earlier you start saving, the more time your money has to grow.  Even modest savings can accumulate significantly over a longer period due to the compounding of earnings on both your contributions and the earnings themselves.  Compound interest works more effectively the longer your money is invested.  Starting early can significantly increase your retirement savings, even with smaller contributions.

Medicare Will Cover All Your Health Care Needs in Retirement

Medicare does not cover all health expenses.  Common exclusions include long-term care, most dental care, eye examinations related to prescribing glasses, dentures, cosmetic surgery, acupuncture, hearing aids, and routine foot care.  Planning for additional healthcare expenses is crucial.  A Medigap (Medicare Supplement Insurance) policy can help pay some of the healthcare costs that Original Medicare doesn’t cover, like copayments, coinsurance, and deductibles.  Compare different Medigap plans to find the one that best fits your needs.  Consider long-term care insurance or alternative strategies like annuities or trusts that can be set aside for these expenses.

You Should Invest More Conservatively as You Get Older

While it’s often wise to reduce investment risk as you approach retirement, being too conservative can be a mistake.  With increasing life expectancies, your retirement savings may need to last 20-30 years or more, and some level of growth-oriented investments may be necessary to ensure your funds don’t deplete too early.  As you get older, your investment time horizon shortens.  This means you have less time to recover from potential market downturns.  Younger investors can typically afford to wait for market fluctuations because they have more time before they need to access their retirement funds.


Understanding these common retirement myths can help in making more informed and realistic retirement planning decisions when considering and planning for your retirement. It is important to always consult with a legal expert in estate planning, contact Legacy Counsellors today at or (413) 527-0517.