The dream of one day escaping from the 9-to-5 grind and having time to travel, relax and spend time with family is what keeps many people engaged in their work when it becomes particularly stressful. If you want to achieve thatgoal, though, it is key to start planning for retirement early — and take a smart approach to the process.
Unfortunately, there are a lot of common beliefs about retirement that simply aren't true – and falling for them could hurt your effort to plan and prepare. Once you've separated the myths from the facts, though, you can create and implement a plan that will leave you with your feet in the sand during your golden years.
5 retirement myths you shouldn't believe
There is a lot of misinformation about retirement. Here are some myths you may have heard but should simply disregard.
Myth 1: The market is too risky for your retirement money
Investing in the stock market can be a scary proposition for some people – especially if the money you're investing is what is bookmarked for your retirement. Not investing in the market, though, can be a big mistake for retirement savers, especially young ones.
Over the course of your working life, the market will certainly go through several cycles. There will be times when it is up and your account — whether it's a, an individual retirement account (IRA) or a — will make you smile. There will also be times when the market is down and you'll be tempted to pull your money out.
All that matters, though, is being up in the end — and history shows that the market does go up in the long run. As you get older, you'll likely want to invest more conservatively to protect your assets, but in the early stages of your savings journey, it can make sense to ride out the bad times and take advantage of the overall growth.
Myth 2: You don't need to save for retirement until your 40s
Some will claim that people in their 20s or 30s are so far away from retirement that there's no reason to worry about saving money — — not just yet, anyway. This could not be further from the truth. Saving money when you're young is key to building the type of nest egg you'll need for your retirement.
This is because of a thing called. When you save money in a vehicle like a , you earn interest.
Here's the neat thing, though. You don't only earn interest on the money you deposit, but you also earn interest on your interest. The longer the money sits in the account, the more that interest grows.
Eventually, a relatively small amount of principal can lead to a robust account value. And, starting to save money when you're 22 rather than 42 gives you 20 more years of compounding to build up that wealth. Once those years are gone, though, you can't get them back.
Myth 3: Social Security will cover your expenses
is a program that was founded as a response to the Great Depression. It provides monthly payments to retirees, and the total payment amount is determined by a formula that takes into account how much you worked and contributed to the Social Security fund during your career.
The maximum payment for Social Security is currently $4,555 — and that's for someone who delays taking payments until age 70. Simply put, unless you live an extremely frugal life and have no unexpected medical issues, Social Security will not be enough to fund your retirement. You'll need to do some work to prepare as well.
Myth 4: Medicare will cover your medical bills for free
Medicare is another government program that is widely misunderstood. It provides medical insurance to seniors, but it isn't as simple as some make it out to be. You'll have to sign up for the program when you turn 65 and make choices about what coverage you get. For instance, you'll have to choose whether or not to get Medicare Part D, which pays for prescription drugs.
Also, Medicare does not typically cover long-term care services, like nursing homes. To prepare for those circumstances, it might make sense to getto fill in the gaps.
Myth 5: You don't need help with retirement planning
Retirement planning is a complex process. There are a lot of moving parts, and unless you have the time and patience, it can be hard to wrap your head around them.
can make a lot of sense when it comes to retirement. An advisor will help you come up with a plan and help you implement it. There are many types of advisors, so take the time to find one who is a good fit for you and your situation.
The bottom line
Retirement planning is hard enough when you have all of the right information. And, there are a lot of myths out there that can make retirement preparation even more difficult. Once you have your facts straight, though, preparing for retirement is really a matter of putting your money away early, making smart investments and getting help when you need it.
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