One of the biggest concerns of financial experts is the lack of retirement planning undertaken by many Americans. A sizable percentage of workers, even those who are nearing the traditional retirement age, have nothing saved for their golden years. However, this fails to take into account those who have planned with poor assumptions.
Medicare Will Take Care Of Everything
Medicare is decent insurance for seniors, but it will not pay for everything. There are premiums to pay. It’s expected that the average couple who retires will incur more than $600,000 in medical expenses. This includes premiums, deductibles, and expenses that Medicare will not cover. Therefore, those looking to retire will want to account for these expenses before pulling the plug on work.
Social Security Will Be Enough
Many Americans believe that Social Security will take care of them throughout their retirement. This is a bad assumption, and it’s even worse for those who decide to start their benefits at the earliest possible age. The average retiree can expect to draw around $17,000 per year from Social Security. Even when doubling that for a couple, it’s not a huge sum of money. Therefore, it’s important to work toward saving some funds in addition to Social Security. Even having enough to provide for a few hundred in expenses each month will provide some wiggle room for those who might otherwise find it difficult to survive on Social Security alone.
Avoid The Stock Market
Another common misconception that people hold is related to investing in stocks during retirement. Common investment advice traditionally told retirees to avoid investing in the stock market. The volatility of stocks can lead to some pretty large paper losses in a short amount of time. However, this advice was common when bonds and CDs paid higher interest rates. The stock market tends to grow more rapidly than just about any other asset class. That growth can be necessary to maintain purchasing power when taking inflation into account. Therefore, it’s a good idea to invest at least a portion of retirement savings in stocks or equity funds.
Planning for the future is a key step that future retirees need to take. However, poor planning can arise when people start out with the wrong assumptions. These are just three misconceptions retirement savers make, but they are some of the most important they’ll need to rethink to experience a successful retirement.