4 Common Misconceptions About Retirement Planning

Few people imagine themselves working into their old age: The view that most Americans have of their future ‘golden years’ involves long games of golf, exotic travel and the easy life. Unfortunately, without adequate planning and saving, this dream is unlikely to become a reality. Many Americans have a number of misconceptions about retirement planning that can cause trouble for their ability to retire on time or maintain their lifestyle after retirement.

There are many people who believe that they will be able to live on less after their retirement. This is generally not the case. When is it that you spend the most money: on your days off or on work days? Most people spend more money during leisure time than at work. There are some major expenses that you may have removed by the time you retire – your mortgage is a common example – but there are also expenses that you may not have had before retirement as well. Travel and leisure activities are extremely expensive, but are at least optional. Medical expenses, which may also take a sizeable chunk out of your savings, are not.

Retirements are already longer than ever, and they are only likely to increase in duration as the average life expectancy pushes higher. The result is that it takes a large sum of money to establish financial stability for your golden years that won’t compromise the lifestyle to which you’ve grown accustomed. The earlier you start saving, the better off you’ll be. If you wait until later in your working life to start down this road, you’ll either have to make do with less as you put more into your retirement account or wait until later to retire.

There is a great expression that applies well to this line of thinking: “The best time to plant a tree is 20 years ago, but the second best time is today.” It’s easy to get overwhelmed when thinking about retirement planning, especially if you’ve put it off longer than you should have. Those years are coming whether you start saving or not, however, and the sooner you start saving, the better off you’ll be. Julie Richardson’s account, in LearnVest, describes a woman who didn’t start saving until 48. As a single mother living on a schoolteacher’s salary, it’s easy to understand how retirement kept getting put off until next year. She started saving when it was almost too late, but today she is on track to retire without becoming a financial burden on her daughter.

1. While there are a few kinds of debt that should come before retirement savings, it is important to know your priorities. There are too many parents who feel that paying off their children’s tuition, helping to put a down payment on a child’s home or completely paying off a mortgage should be done before retirement savings. As Ellen Derrick, a Certified Financial Planner, explained in Forbes, there is a reason that airlines tell you to secure your own mask first: if you pass out, you are no good to your child.

Retirement is an important issue for anyone in the work force. It is essential to arm yourself with information now so that you are prepared to support yourself in your golden years. Now that you’ve committed to saving for retirement, use our quick and easy tips to get started!