As Baby Boomers face retirement age, they are bombarded with a myriad of retirement advice. Some of it is helpful and other pieces of advice are just myths. Don’t fall for myths about social security, lifestyle choices, Medicare, or retirement savings. Here we’ll separate fact from fiction and debunk 10 retirement myths you best ignore.
1. Medicare Covers Everything
While Medicare covers most healthcare, there are some things that you will need to pay out of pocket for. Medicare doesn’t cover long-term care, hearing aides, routine physical exams, or dental care. Also, make sure your providers accept Medicare. You may still need other health insurance to cover costs.
2. You Need to Retire Debt Free
Not all retirees are debt-free. According to the Center for Retirement Research at Boston College, 63% of older households have debt. Forms of debt that people over 65 carry are credit card debt, medical debt, and mortgages. Increasingly seniors are relying on credit cards to get by or take out bigger mortgages than they can afford. So it is unrealistic that many retirees will retire debt-free.
3. You’ll Spend Less in Retirement
It’s a complete myth that you’ll spend less in retirement. Most retirees end up spending more. Expenses often shift and unexpected expenses become more likely. When planning for retirement, be realistic about your spending habits, and don’t expect a huge decrease in spending. According to the Bureau of Labor Statistics, the average retiree spends around $52,141 per year, or about $4,345 per month.
4. You Can’t Work and Collect Social Security
It’s a myth that you can’t work and collect social security. There are limits, however, on how much you can make. According to the Social Security Administration, if you earn more than the yearly earnings limit, after full retirement age, your Social Security benefit amount may be reduced. For 2024, that limit is $22,320. Your pensions, investments, inheritances, rental income, and household income aren’t included in your earnings limit.
5. Most Boomers Retire to Florida or Arizona
Retirees are flocking to places other than Florida and Arizona. In fact, some of the most popular places to retire are Colorado, Virginia, and Delaware. Colorado has the lowest rate of social isolation and has no estate or inheritance tax. Virginia has some of the best hospitals and excellent elder abuse protections. Delaware ranks high for its low taxes and poverty rate, as well as no estate or inheritance tax.
6. You Have to Be Ready for Retirement
Sometimes life forces seniors to enter retirement before they feel ready financially. You may have unexpected health issues that prevent you from working longer. If this is your situation, you still can make retirement work for you. A financial advisor can help you get on track to live comfortably in retirement.
7. You’ll Run Out of Money
Not everyone runs out of money in retirement! According to Morningstar Center for Retirement and Policy Studies, almost half of American households will run short of money in retirement if they stop working at 65. While these statistics may seem sobering, with planning this doesn’t have to apply to you. Make sure to diversify your investments and contribute to retirement plans.
8. You Should Have Enough Money Saved for Assisted Living
While it may be ideal to have enough saved for assisted living, the cost has become very high. The average monthly cost of assisted living in the United States is between $4,500 and $5,511. If this is not realistic for your retirement plan, it’s best to have another long-term care plan. For example, can your family help provide care or can you hire a burse to come to your home? These options may all be less than assisted living.
9. All Retirees Travel The World
How you spend your retirement is up to you! Don’t believe this retirement myth- you don’t have to travel the world in retirement to be fulfilled. Maybe you would rather spend quality time with family, or focus on your hobbies. There’s a misconception that most people will be bored in retirement unless they stay busy. This may not be the case for you.
10. Life is Linear
While we try to plan for the future to the best of our abilities, life is not linear. Even if you have an excellent retirement plan, unforeseen circumstances may require you to return to work and ‘unretire’. Flexibility is key in retirement. Embracing life and all its twists and turns will give you the greatest happiness in retirement.
Debunking Retirement Myths
Retirement is a huge life milestone that should be celebrated, not feared. Take back your retirement planning by ignoring all the misinformation that surrounds this stage of life. By debunking these 10 misconceptions, you can make more informed decisions about what may lie ahead for you in life.