Retirement is one of the most important financial goals for many people.
Unfortunately, many workers and retirees may have an incomplete or misleading picture of how much they need to save, how to invest their savings effectively, and how to make their money last as long as they live.
Clearing up common misconceptions about retirement is essential so that you can fulfill your dreams of a worry-free retirement.
Here are six of the top misconceptions:
1) Not providing for a surviving spouse. Many couples fail to plan for the eventual death of one spouse before the other. Wills have to be in place with correct beneficiaries, this is especially important with second marriages involving children. Both spouses should know where investments are and what type of investments make up the portfolio.
2) Not allowing for inflation. Inflation can eat into your purchasing power which can reduce your disposable cash, and, ultimately your lifestyle.
3) Not being realistic about long-term care. Many people do not think they will need long-term care, but if the situation arises, it can be very costly and decimate your portfolio.
4) Not understanding investments. Many employers offer retirement savings plan options, but the employees are mostly responsible for choosing the specific investment in their portfolio. Failing to understand fees and investment returns can lead to poor growth. Your retirement savings plans should be working as hard as you do.
5) Not knowing sources of retirement income or in what order to draw from different sources. You don’t want an unexpected surprise when you see what your income is in retirement. Failing to plan can also lead to government benefit claw-backs.
6) Not getting professional advice. See a specialist, you deserve to.