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.

Call Me Grandpa

Three months ago my daughter proudly announced the arrival of Lucas – her son and therefore my grandson. He is her first child and more importantly our first grandchild! A cute little dude with big eyes and a smile that is going to get him into trouble when he grows up. He is already discovering the finer points of flirting.

It is hard to believe that little gremlin I used to carry in a backpack as we walked Capitola beach now has a gremlin of her own.

My daughter and her family live two hours south of us which is the perfect distance – close enough to reach via a moderate drive but not so close as to be easily accessible for short notice babysitting. Needless to say with the new addition we will likely head south more frequently – gotta be part of those memorable baby pictures.

It is exciting to be a grandpa. Years ago my wife and I talked about having grandkids. “Sometime down the road it will be wonderful.” Well that road has now been traveled and here we are.

As a novice grandpa I look forward to sharing new experiences with Loo, seeing the world through his eyes and being part of his excitement at all things new.

Sharing first time experiences

Loo (currently four months of age) recently visited Target for the first time and was pretty much overwhelmed – in a good way. The sights and sounds and smells, the chattering people – all interested in getting a closer look at him – and the bright colors, everything new and everything  exciting. I am sure his little heart was fluttering at full speed as he tried to take in all the stimuli. And we are only talking about a visit to Target!

I imagine his first visit to the zoo and the amazement he will feel with so many crazy and diverse and noisy critters to see.

What about his first taste of cotton candy? A gossamery wisp of sweetness that melts as it touches your tongue.

Something as simple as feeding a bluebird in the backyard will be an adventure for the first time feeder.

And his first pickle! Pickles are a tradition in our family. It is not unusual to see any of us comfortably seated in front of the TV whittling away at a massive dill. I await his expression when he first chomps into a juicy gerchin.
I believe seeing new experiences through the eyes of my grandson will allow me to appreciate the little things that much more. Everyday occurrences that become mundane can transform into miraculous events when realized from the perspective of a novice. Thank you in advance Loo for setting me straight.

A Grandpa’s responsibility

Parents have a tough job when it comes to raising children. Their job is 24/7. The child’s safety and future is in their hands. The person they will become is hugely determined by the example parents provide. Likes and dislikes, hopes and aspirations, prejudices and beliefs, all will be mirrored in the little person, that chip off the old block.

As a grandpa I survived the day-to-day stresses that come with providing for a family. Free of that burden I can focus on what matters most – at least in my opinion. I would share three wisdoms gleaned from my 61 years on this Earth:

Treat others the way you want to be treated – an oldie but goodie and applicable to all things. You are never too young to start living this.

Find something you love and follow it – in the end it is better to look back on a life spent doing what you are passionate about rather than tallying your bank balance. My son has worked his butt off for the past seven years to get a full time job caring for animals in the zoo. He majored in zoology and in a very competitive job market has shed blood, sweat and tears working for free or close-to-free to get his foot in the door. He recently secured a full time job at the Oakland Zoo and we are all ecstatic. It’s not just about money – it’s about getting up each morning looking forward to your day. Loo, take a lesson from your uncle and follow your dream.

Listen – with your mouth shut and your ears open it is amazing what you might learn. Chief Luther Standing Bear said,”Silence grants a space before talking was done in the practice of true politeness and regardful of the rule that thought comes before speech.” You cannot listen if you are talking.

We have been grandparents for four months. As a newbie to the game I can say that the experience is all we could have hoped for and imagined. Each smile on that little face brings an immediate smile to this old mug. To me there is no sweeter sound than his cooing whispers after a good meal, living in the moment without a fear in the world. It may have taken a while to get here but grandparenthood is good. We look forward to sharing what tomorrow brings in the everything-new never a dull moment life of our first grandson.

What’s Your Mindset About Retirement?

By Marianne Oehser

Your mindset affects every part of your life. That is especially true about retirement. Your attitudes and beliefs about this time of your life will determine whether you see endless possibilities or whether you buy into some of the negative myths. It will affect your health and your happiness.

Most people choose one of two mindsets about retirement: The Euphoric Mindset or the Gloom-and-Doom Mindset

The Euphoric Mindset

As we approach retirement, most of us are ready to say goodbye to the hectic pace and all the stress that goes with most careers. We are ready to downshift a bit and are excited about enjoying our much earned ‘vacation.’

The retirement picture we create in our minds is often the Hollywood version with lots of excitement but not much clarity. It’s filled with images of things we want to do — travel, golf, tennis, boating, or anything else we have dreamed of doing. And, probably the new toys you want, like a boat. For many of us, that is just how retirement starts and it feels pretty euphoric. Enjoy it while it lasts.

Just like any outstanding vacation, it is not a permanent state. It is simply not realistic to expect the euphoria and the newness to last forever – but somehow, we do it anyway. We think that being on vacation for 20 years will continue to have the same excitement that it had in the beginning. But, it doesn’t – it fades.

The problem with a Euphoric Mindset is that it leads to disappointment. The day will come when all the play is not as much fun as it was in the beginning.

This can create a new kind of stress. Retirement no longer fits your Hollywood image and you don’t know what to do about it. You are no longer sure what you want your days and weeks to be like. You probably feel like you are a bit adrift.

That is when it’s time to get serious about building your Happiness Portfolio®. That means designing your new life so that it is balanced and diversified just like your financial portfolio. Research shows that the people who are the happiest in retirement are those who invest time and energy in all aspects of their life — having fulfilling relationships, enjoying social connections, making a contribution in some way, maintaining your health, enjoying leisure activities, growing as a human being in some way, and incorporating spirituality – whatever that means to you.

If you are looking at retirement with a Euphoric Mindset, by all means keep the mindset that this will be the best time of your life but be realistic about the fact that the honeymoon will end and figure out what you want your life to be like when it does.

The Gloom-and-Doom Mindset

The opposite of the euphoric mindset is the gloom-and-doom mindset. The gloom-and-doom mindset looks at retirement as the end of the line. The story it tells you is that all the good things in your life are over and there is nothing more to look forward to. It tells you that you are being put out to pasture because you are useless. It says that everything is downhill from here and focuses on your own mortality.

One of the big problems with such a negative outlook on this act of your life is that it can become a self-fulfilling prophecy. When you are focused on all of the things that are potentially bad about this new phase, you are not likely to see the endless possibilities for how great your life can be now. This kind of thinking can negatively impact your health and lots of research studies have shown that it probably will. It will definitely turn you into a grumpy person and can lead to serious depression.

Of course, there are some legitimate things that are not so wonderful about this phase of your life. You probably don’t have the boundless energy of your youth. You might fear that you will become ‘irrelevant’ and may not keep up with all of the information and technology changes that will certainly evolve. A whole segment of your social life will disappear including the people you interacted with as part of your career. These things are real but you don’t have to let them take you down a rabbit hole you can’t get out of.

Shifting your mindset to a more positive perspective will allow you to look at things differently. Choosing a story that includes the possibility that there are more positive things ahead will shift your mindset and allow you to see ways to deal with the downsides of life after your career.

Staying stuck in either the euphoric or the gloom-and-doom way of looking at retirement will not serve you very well in the long run.

A Third Option

Carl Jung, Ph.D. was a Swiss psychiatrist and founder of Analytical Psychology who had a profound impact on how we see a wide range of areas today. Dr. Jung offers us another way of looking at this stage of life. He talks about the “afternoon of life.” The morning of our life is focused on achieving things – getting an education, building a career, raising a family, acquiring things, becoming someone. Dr. Jung says the “afternoon of life” is not just a “pitiful appendage to life’s morning” and rather than seeing our afternoon as a process of reduction, he says it is a process of expansion.“The afternoon of life is just as full of meaning as the morning; only, its meaning and purpose are different.”                              

This way of looking at the new chapter of your life suggests that there is much to be savored about it. The afternoon just has a different rhythm than the morning. It may be a time for slowing down a bit but it can still be filled with enthusiasm and activity. It is an opportunity to focus on different things than you did in the morning of your life. It is an opportunity to see new and different possibilities for how you invest your time and energy. It is a time to discover the meaning and purpose of your own afternoon.

It’s time to bask in your afternoon sun.