Debunking 5 Common Retirement Myths

Written by James Clarke

While Americans know full well they have to save for retirement, many have some mistaken assumptions that could end up costing them money when they’re older. When it comes to crucial aspects like healthcare, for example, most couples don’t realize that they’ll need over $280,000 in retirement savings for healthcare costs. Beyond healthcare, there are many other retirement aspects that Americans are uninformed about and here we’ll cover 5 of them.

My Social Security and Pension Will Be Enough

Banking on your social security and pension to be enough to support you in retirement is a terrible misconception. When looking at the numbers, Social Security provides a third of the monthly income for most retirees at about $1,471. Despite this, 21% of retired couples and 45% of retired singles still depend on Social Security for 90% or more of their retirement income. You shouldn’t count on your pension too much either as both public and private pensions are in trouble. While some are at risk of going under, others have billions in shortfalls and won’t be paying as much as originally promised.

I Don’t Need to Plan for Retirement Just Yet

While most people know they have to start their retirement planning early they tend to put it off. CFP and financial educator, Joe Catanzarite warns that people don’t start retirement planning until it’s too late or something happens that sends them scrambling. This can lead to costly mistakes and reactionary buying of financial products that they may not need and don’t help create a plan for the future. Therefore, Catanzarite recommends you start planning early, listing your priorities and goals and seeking advice from a qualified planner.

Borrowing from My 401(k) is a Good Idea

Borrowing from your 401(k) should only be as a last resort. Investopedia notes that you could lose investment earnings on the money you’ve borrowed and repay the loan with after-tax dollars. Should you lose your job you’ll also have to repay the loan faster, during your next tax return. Thus, it’s a good idea to consider other avenues like short-term loans, or a title loan to avoid the headache of borrowing from retirement savings. With title loans in Ohio having only minimal requirements for borrowers such as a vehicle title for collateral, it’s a comparatively low-risk move compared to borrowing against your 401(k). Online options are available depending on the state, with loaners Highway Title Loans, for example, servicing borrowers in Arizona, California, New Mexico and Utah, among others. With a short-term loan, you’ll also avoid potential penalties and tax implications associated with borrowing from tax-deferred investments.

I Won’t Have as Many Expenses

For mysterious reasons many Americans believe that their living costs will magically decrease by half when they retire. In fact, they could go up. You’ll still be paying for your home when you retire, and although your mortgage may be paid off, you’ll pay for insurance and property taxes. You’ll also need transportation, food, utilities and communications. Sure, you’ll spend less on fuel because you no longer have a daily commute but your car will still need insurance and possible repairs. As we mentioned above, healthcare could even make your living costs increase. Plan for maybe a 20% to 25% reduction at most.

I’m Going to Work After Retirement

Many people expect to continue to work during their retirement and two in three expect that work will be a major or minor source of income, based on a survey by the Employee Benefit Research Institute (EBRI). In reality, only half of those can do so and the rest leave the workforce due to job loss, and disability, among others. Therefore it is important to plan to retire 3 to 5 years before you think you will and delay taking Social Security benefits for as long as possible.

There is No Going Back

Fond memories of days gone by are a joy to replay in our mind’s eye. Whether reliving a particularly happy time in our life or recalling a rare perfect confluence of all things good, our past can be a riverbed of precious nuggets waiting to be mined. Occasionally memories might even outshine the life we currently live.Do you ever find yourself tempted to return to that special place packed with special memories to do it all again? It was so perfect – why not go back? You might stay at that same wonderful bed and breakfast, maybe even in the same room. Is that spectacular dining spot still around, perhaps with that identical table and oh-so-memorable view? Maybe you take again that same wandering path through hillside vineyards or find once more the hidden wine shop tucked inconspicuously into an obscure corner of the village. Though memories may be clear, the way back is not always.

About nine years ago my wife and I visited an off-the-beaten-path restaurant in Intragna, Switzerland. Our table was one of about fifteen spread comfortable across one large room. The food was incredible. I swear I can still taste the truffle pasta. Through the window we gazed upon a little valley speckled with brightly painted houses the air resonating with bell-clanging cows while in the distance lurked the ever present snow capped mountains. As the meal unfolded we witnessed the slow progression of a spectacular sunset painting the world a royal red before closing down the day. Service was friendly and nine years later I still remember my first sip of grappa from those foot long bottles they acrobatically poured at meal’s end.

The memory remains crystal clear, like we were just there. Talk about the perfect moment.

Last year we revisited this spot excited to relive our nostalgic experience. I think we were realistic – we did not expect such a perfect moment but were hoping for something close.  It turns out our memories far out shined current day reality. The experience was not bad it just was not a good as before.  The food was not quite as tasty, the service mediocre, and the whole vibe was a bit off. That certain magic was missing despite some near misses.

Messing with perfect memories can be a risky proposition. What are the chances the second time around will be better or even as good? You can safely assume not everything will be the same. And there is always the chance they will be worse, inferior, not worthy of special memory categorization at all. Imperfections might actually pollute that perfect picture painted years ago. Is it worth the risk?

My dad grew up in Sioux City, South Dakota. Over the years he shared many colorful stories of his life adventures, some comical, some heart rending, all near and dear to him. A few years ago he took my mom on a trip to show her his old stomping grounds. You would expect signs of “progress” over the interim fifty-plus years (aka traffic, sprawl, dirt roads converted to highways, all the wonderful ingredients of growth). Not only were most of the familiar landmarks gone, they could not even find where the old farmstead had been. Little was as it had been when dad was growing up. Fortunately they were able to hook up with my dad’s roommate from medical school so the trip was still a success. That said it was not what they had hoped.

Revisiting and attempting to relive a perfect moment is a noble pursuit. What fun it can be to plan and make arrangements to do it all over again. We do all we can to get it right, down to the smallest detail, and hope for the best. If things do not work out exactly as we hope it will not be due to any lack of trying.

Some may choose to play it safe – leave that perfect memory alone and savor it in blissful review. Break out a nice Pinot Noir, bring out those pictures and take an invigorating virtual stroll down memory lane. Ah but those were good times.

But if you decide to play it safe what about those potential new memories that will never be realized? Although our second Intragna excursion was not on par with the first, while on the trip we discovered the beauty of Thun where we took a lovely boat ride around the lake and wandered the historical streets in search of amazing pastries. Other new experiences included walking the castle wall in Lucerne overlooking the city and nearby mountains, a quick ferry across the Rhine in Basel, and a truly amazing walk among the vineyards along Lake Neuchatel. Now we can add these new special memories to our existing database.

Good memories are a wonderful thing. While we are still able to why not make as many of them as possible. Cheers 🙂

LoveBeingRetired.com


How a Part Time Job Can Improve Retirement

Do you ever find yourself counting the days until you can retire? I remember times I hated what I was doing but had no choice but to persevere, take it on the chin, grin and bear it, you know the drill. The promise of a day when I would be free from my toils shined brightly in my mind. Oh to do what I wanted when I wanted, answering to no one, no longer just existing and calling it a life but instead really living. I looked forward to retiring.

And once I got there although a bit ahead of schedule it was good. I never missed work. I kept myself busy with hobbies – old and new. I exercised, gardened, read, played piano, blogged, and when the mood hit me napped.

Then one day all those activities and interests that had filled my days began to feel a bit less interesting. The nice routine that kept me occupied until just about happy hour each day began to feel a little old, boring even.

It’s not that my retirement was a failure, but more it needed a kick in the pants, a little fine tuning to be all it could be.

My salvation came when the owner of a nearby (like one mile away from home) winery called and asked if I would like to join them pouring their lovely Pinots and Chardonnays. Prior to “the call” my wife and I had been members of their wine club for about two years. We explored all of the local tasting rooms (how about 24 in a half-mile radius) and settled on Mercy as our favorite. Not only were the wines amazing but the owners and fellow wine club members were great – fun to spend time with and never a dull moment. These days I walk to “work” three days a week where for five hours I share wonderful wines with wonderful visitors from all over the world.

When I left the working world I had no plans of ever returning to work – not one, ever. Live free, stay free was the way I saw Dave experiencing his golden years.

But I realized I was not limited to doing the same thing I had during my career. There were many avenues to explore, many alternatives to what I had done. I can honestly say I never saw myself pouring wine at a tasting room. But now that I am here I love it.

My wife recently tested the retirement waters for the first time. She lasted about six months. Sure she enjoyed no commute and no job stress. But she quickly felt she was wasting her time. She likes to get things done, to feel productive. Her solution was to sign on with a temp agency. They find part time opportunities across a variety of local companies. My wife enjoys moving from place to place where she meets new people and gets to explore different roles. When one gig is done she is available for the next. Her only challenge is she is so good at what she does the companies want to hire her full time. Even if tempting, I remind her retirement is her top priority. We are in this together!

Some are blessed to find themselves immersed in a career they love. Imagine looking forward to each day on the job rather than dreading the harsh alarm clock ringing in another trip to the grind. For those who love what they do there are seldom thoughts of retirement. My folks worked with the same estate planner for the past 40 years. He genuinely loves what he does describing his role as helping others prepare for a more secure future. Staying current with the changes in laws and regulations keeps his mind sharp. Although he has reached “the right age” he has no plans to retire anytime soon. Why search for something to replace what you already love?

If you consider adding a part time job to your retirement here are a few takeaways from my personal experiences:

Be picky – this time you get to choose where you work. Make sure you are doing what you like.

If at first you don’t succeed… should your part time gig fall short of expectations you can always exit and try something else.

 Think outside the box – your retirement career does not have to be related to your earlier career. Take a look at everything out there. This time you get to follow your heart rather than your wallet.

Stay engaged – when you leave your job behind, you also leave the people you interacted with. I believe staying socially engaged is critical to a happy retirement. Good moments are even better when shared. And bad moments can feel less daunting with the support of others.

Set your own schedule – you’re not working full time so arrange things according to your wants and needs. I find Thursday/Saturday/Sunday works quite well.

Have fun – why else work if you don’t have to?

Part time work has been a wonderful addition to our retirement. We engage with people, learn new things, get out of the house and even make a few bucks. But our real job is being retired. That is the career we are committed to and happily pursue each day.

LoveBeingRetired.com