It’s meant to be the golden era, but manage it badly and retirement can quickly turn into the opposite. The press is full of all sorts of disaster stories of people not having enough money available for their advancing years – and that’s the exact reason today’s post has been put together.
In short, there are all sorts of myths and misconceptions surrounding retirement and what you should and shouldn’t do. The purpose of this article is to dispel these myths once and for all, and to hopefully ensure that you approach your golden years full of cheer.
Myth #1 – It’s easier to save when you’re older
There’s no doubt that during your early career, times might be hard. Your salary might be low, you might have several mouths to feed, and put simply saving for a pension is just out of the question.
This doesn’t mean to say that you should delay your savings indefinitely though. On the contrary, as soon as you get the opportunity to start saving you should seize it with both hands. As time progresses, it goes without saying that you have less time to save, and this obviously makes the job a whole lot harder. You’ll also have other expenses like elderly care, and even funeral care plans to think about if you are thinking for the long-term.
Myth #2 – You won’t spend as much when you retire
This is arguably one of the biggest myths about retirement, and the knock-on effect of buying into it opens up a whole host of problems. It affects the amount you save and before you know it, you don’t have enough for your final years.
In short, forget about thinking that you will spend less than you do currently. Studies have revealed that you actually spend around 95% of what you do now – so a very similar amount. Let’s not forget that you have much more time at your disposal, and this can result in more time to spend money.
Myth #3 – You will retire at 65
There’s a bit of a myth circulating about 65 right now; it’s widely regarded as the standard retirement age. In short, this isn’t necessarily true.
In an ideal world, retirement would begin at that age. Unfortunately, it’s anything but an ideal world right now, and the correct answer in relation to the retirement age is “when you can afford it”.
Sure, this might be earlier than 65. Don’t fall into the trap of thinking that as soon as you reach this age you are automatically entitled to the big R though.
Myth #4 – You will live until 79
Budgeting until this age is simply asking for trouble. Sure, there’s a place for statistics, but when it comes to calculating how much money you need for your retirement it can be a good idea to ignore them.
Just because the average lifespan is 79, it doesn’t mean to say that you are definitely going to live to this age. You might live for an additional ten years and suffice to say, this poses a major cash flow problem if you haven’t budgeted accordingly.