Leaving the workforce after years in your career is one of the greatest changes that will occur in your life. It is natural to feel both excitement and trepidation at the prospect of such a major adjustment. From choosing the right insurance coverage, to knowing when to take your pension or social security, and wisely investing your hard earned assets - we are here to help.
Our role is to help you prepare for these changes so that you have the clarity of knowing what comes next, the confidence that you have made the right decision and the peace of mind that allows you to enjoy the next stage in your life. After all, you earned it. And when the unexpected happens, such as the loss of a spouse, the birth of a grandchild, serious illness, or continuing care needs, we are prepared to assist during these emotional and trying times.
Here are some common retirement myths and realities to consider:
Myth: I have plenty of time to save.
A recent study found that only 45% of Americans retire when planned. The majority of early retirees did so involuntary due to health reasons, being laid off or because of negative work conditions.1 You might even be forced to stop working to care for children or aging parents.
Myth: Pensions and Social Security will cover my living expenses.
According to the Social Security Administration, Social Security provides only 36% of the total income for individuals 65 or older.2 Pensions, for those who have them, account for 19% of household retirement income.3 It is critical for you to understand your future benefits package and plan for additional sources of income.
Myth: My expenses will decrease when I retire.Your expenses may increase during the first few years of your retirement because you have more time to enjoy the things you were not able to do while you were working. As you age, new challenges arise such as providing financial assistance to adult children, spending on grandchildren and rising medical expenses due to sickness.
Myth: Medicare will cover all my medical expenses.
Medicare only covers basic health care expenses. Out-of-pocket expenses such as healthcare premiums, co-pays and other expenditures for vision, hearing and dental care can add up to $4,300 per person annually.4 In addition, two-thirds of all Americans over 65 will need long-term care at some point in their lives.5 A staggering 21% of people who enter nursing homes will need care for 5 years or more.6
Myth: I will be in a lower tax bracket in retirement.
This may not be true. If all your income is in taxable accounts, 100% of it could be taxed. In addition, required minimum distributions, might force you to take income from retirement accounts, even if they are not needed. This means you could remain in the same tax bracket or potentially higher.
Myth: My Retirement will only last 20 years.
Due to advances in medicine and the overall awareness of health, people are living longer than in previous generations. If you are married, there is a 63% chance one of you will live to age 90, and a 33% chance one of you reach age 95.7
- LIMRA Retirement Study – Consumer Phase, 2012.
- Social Security Administration – Fast Facts and Figures About Social Security, 2013
- Pension Benefit Guaranty Corporation
- Center for Retirement Research at Boston College Study: Health Care Cost Drive up the National Risk Index, 2008.
- US Department of Health and Human Services, National Guideline Clearinghouse Long Term Care Information, 2012
- Field Guide, National underwriter Company, 2011
- Annuity 2000 Mortality tables
Don’t fall for these common myths. Let’s create a retirement plan together to meet your individual needs.