Having worked in the financial services’ field for over thirty-years, I sometimes feel that I’ve retired each and every one of those years; Why? Because each year I’ve had clients enter the retirement phase of their lives. Here are some myths they’ve taught me as we’ve gone through this process together.
Myth number one – Retirement means that I can stop investing.
Here’s the good news. People are living longer. The bad news; their money needs to last longer, as well. Your immediate money, that which you will be spending within the next few years should be low risk and safe, but I’m always worried about that little old lady and that little old man in their nineties, thirty years in the future that you could become. If we’re going to try to stay ahead of inflation, investing needs to continue to be part of your overall strategy.
Myth number two – My taxes will be lower in retirement.
I once had a new client look me right in the eyes and tell me that everyone’s taxes go down once, they reach the age of sixty-five. Really? I said, even Bill Gates and Warren Buffet? Suddenly they got a confused look on their face. They really believed taxes for everyone automatically went down at the age sixty-five. Age has nothing to do with your taxes. You might be in a lower tax bracket in the future; but taxes are determined by your tax return, not your age.
Myth number three - I’ll live on less when I’m retired. Experience has taught me this might be true for some, yet not true for others. The first third of your retirement are often called the Go-Go-Years, where I often seen more money spent on travel then over before, followed by the Slow-Go and No-Go Years which often times includes additional medical and long-term care costs. As with other parts of our lives, the cost of living continues to increase with time and what we spend our money on changes.
Myth number four – Everyone can plan the same way. Everyone’s life is different and requires different solutions. The common answer to nearly every question I’m asked about in regards to retirement planning is the phrase, “well, it depends”. Everyone’s life situation is unique. There are seldom cookie-cutter solutions to individual situations. If you hear someone providing a pat-answer to a retirement question, you might be getting a factory-made cookie. Just remember, homemade is often much better.