There are all kinds of myths about almost every aspect of personal finance, from investments to credit scores. Retirement is another category. money myth. If you’re not careful, this type of misinformation can cost you a comfortable retirement.
Money expert Dave Ramsey debunks some of the most popular retirement myths on his website. ramsey solutions.It’s time to stop believing in these six things retirement myth.
read: Do not claim Social Security benefits until you reach this milestone
more: Simple and effective ways to enhance your retirement life
Myth 1: You will survive on Social Security alone.
According to a post by Ramsey Solutions, retirees receive an average monthly income of $1,657 from Social Security. If a retiree were to rely solely on this income, they would only receive $19,900 each year, an amount that would not cover a comfortable retirement.
While it’s true that retirees receive Social Security benefits upon retirement, these benefits are not designed to fund your entire retirement. It’s up to you to start building a robust retirement portfolio today.
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Myth 2: If you invest up to your 401(k) match, you’ll have enough money to retire.
Maximizing your workplace 401(k) is a great way to start investing for retirement. However, you should not stop investing just because you have a match.
A post from Ramsey Solutions recommends investing 15% of your income into your retirement. You can do this a few different ways, depending on whether you have a traditional 401(k) or a Roth 401(k).
Those with traditional 401(k)s are advised by Ramsey Solutions to contribute up to an amount that matches their employer’s 401(k) and work with an expert to invest the rest in a Roth IRA. Masu. If you have a Roth 401(k), we recommend investing the full 15% in your workplace retirement account.
Myth 3: Continue working after retirement
This myth includes a disclaimer from Ramsey Solutions. Retirees who work after retirement do so because they want to work. If you don’t want to, and if you’ve made financial preparations in advance for a comfortable retirement, you probably don’t have to.
Myth 4: Medicare covers all medical costs.
One of your biggest expenses in retirement is medical expenses. A retiree can become eligible for Medicare once she reaches age 65, but it is not designed to cover all of her medical expenses. Retirees will need to pay deductibles, copays and long-term care costs, according to a Ramsey Solutions post.
To protect your retirement and address unexpected medical expenses, Ramsey Solutions recommends that retirees purchase long-term care insurance when they turn 60. Retirees should also increase their retirement savings and invest funds in health savings accounts (HSAs) to help pay for medical expenses.
Myth 5: It’s too late to save for retirement
Who said that? There’s always time to save for retirement and grow your retirement savings.
If you are working for a shorter period of time, Ramsey Solutions recommends investing 25% of your income each year until you reach age 67.
Myth 6: The path to retirement can be predicted financially.
It’s a huge misconception to think that you can plan your finances for retirement on your own. Rather than trying to plan for retirement on your own, Ramsey recommends working with an investment professional.
Why should you work with a professional? An investment professional will review your retirement financial plan with you to determine if you’re on the right track. If you need to make adjustments to get back on track, we can share what changes you need to make based on your expertise, not your guesswork.
Plus, by consulting with an expert, you can ask any questions you have about retirement, get the answers you need, and plan the next chapter of your life with confidence.
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