Do you want to retire successfully, happily, and easily?

 

Retirement is simultaneously an exciting and terrifying topic of discussion.

 

Exciting as retirement provides opportunities perhaps not available during one’s years of working.

 

Terrifying as the list of unknowns is often many unknowns can sometimes be very intimidating.

 

Below we discuss 7 common and crippling misconceptions people have about retirement that hold them back from achieving great success.

 

Misconception 1: I need to wait till a certain age to retire

In 2022, the average age for men to retire is 65 and the average age for women is 62. Since 1992, that has raised from 62 for men and 59 for women. When considering retirement, for many there doesn’t really seem to be another option: men are waiting till at least 65 and women are waiting till at least 63.

 

But is waiting till those ages actually necessary?

 

There are essentially four main factors to consider when thinking through retirement age: lifestyle, location, financial assets, and health.

 

• Lifestyle: What lifestyle do you currently have and do you want to continue the same level or raise/lower your level of lifestyle.

• Location: In close conjunction to lifestyle, where do you want to retire? Where you want to retire will not only dictate how much you need to retire, but how much you need in retirement depending on what you will do.

• Financial assets: For most people, social security is not enough alone to retire on. Considering that, what have you saved through your working career and is that enough to live the lifestyle you want in the location you want.

• Health: Health can be both a positive and negative. Perhaps you have a health concern that is forcing you to retire sooner than expected. Have you planned for that? Perhaps you are in great health and you want to work longer than needed. Thinking through and planning this is an important step.

 KJ and I hold to the point that if you have planned and thought through all of these points, and have a solid plan, there is no reason you need to wait till the expected social age in your 60’s. If you have the financial means, and want to retire in your 30’s, 40’s, or 50’s then have at it!

 

Retirement should be something that you look forward to and do what you want to do in your own time. Don’t be pressured to a certain age, simply because of a supposed social expectation.

 

Misconception 2: I need *insert random number* amount of money to retire

If you do a quick google search on how much you need to retire, you will get a broad number of answers from monthly amounts to percentages of your current income to total end goal amounts to shoot for.

 

The problem with all of these, is they are not personalized for you specifically.

 

Googling how much you need to retire without consulting a trained financial professional, is like googling what shoe size you need without measuring your feet.

 

Google does not know your financial situation any better than it knows how big your feet are.

 

Understanding what your personalized retirement number is takes an in-depth look at your lifestyle, financial status, and retirement goals.

 

You may look at google and see it is recommending 3 million dollars. Well, depending on where you live and what you want to do, that may be too much. It also may not be enough.

 

Take the time and sit down with a financial coach or planner, and figure out for you personally what you need.

 

Misconception 3: I can fully count of social security

Social security has been around since 1937. Since then, retirees have come to expect a certain level of monthly financial income after they retire.

 

The problem with social security, is that depending on your age and when you retire, the benefit level may be different than what you expect.

 

For example, the earliest you can start receiving your social security benefits is 62.

 

So if you are able, and have retired earlier than 62, then you need to take into consideration that you will not have social security to help fund your lifestyle until you hit that age.

 

Another point to consider is that social security for those who are younger, may not be what you expect.

 

The recent 2022 Social Security Trustees report shows that if Congress does not address certain issues, starting in 2034 retirees will begin to receive only 77% of the benefit level.

 

Do not, unwittingly, assume wrong information that may really stick you in how you plan for your upcoming retirement.

 

Take the time and talk to a professional about your specific situation to see if and how much social security will affect your financial situation.

 

Misconception 4: The stock market is too risky

Kevin and I have heard this statement far too often from clients who, after seeing huge market crashes like 2008, assume the market is not a safe and secure financial asset for building retirement wealth.

 

Additionally, they approach the market as intimidating because they themselves do not personally understand the stock market well enough to invest in it.

 

That mindset is far too general and inaccurate.

 

Yes, the stock market has intrinsic risk but with a good plan the stock market is not overly risky.

 

That statement may seem counterintuitive. But when managed correctly, the risk in the stock market should not be cause for concern to the point of not using it.

 

Take for example driving a car.

 

There are intrinsic risks every time you get in your car.

 

Your car could have a miscue like the brakes could go out, or a tire could go flat. You could also run into something that maybe is out of your control like a weather issue or another driver who is driving erratically.

 

Are those risks enough to keep you from using your car daily? Of course not.

 

Why not?

 

Simply stated, the rewards outweigh the risk.

The convenience of a car and the many benefits that the car provides strongly outweighs any risk that may come.

 

Similarly, the benefits of a long-term investment in the stock market strongly outweigh any concern of risk if managed correctly.

 

Paul Merriman, a former financial advisor and current financial educator, speaks often of the long-term benefits the market provides.

 

On his website, he writes numerous articles including this one showing the positive long term returns in the stock market, despite there being times of major decline in the economy.

 

Given a well-managed plan by a financial professional, the risks of the stock market are simply mitigated, and the long-term results far outweigh the short-term risk.

 

Misconception 5: I can’t afford to start investing

In our meetings with clients, another popular theme Kevin and I hear is that investing is only for the wealthy.

 

Sadly, because of this thinking, many younger people lose valuable years of their money in the stock market.

 

Certainly, investing is easier when there is an abundance of money that can be allocated after paying bills and essentials.

 

However, as a financial coach, I’ve had the opportunity to sit with many clients who were either using money in ways they didn’t need to or had more money than they thought because they didn’t track their spending.

 

For this reason, I always encourage young people to make a budget.

 

What budgeting allows you to do is get a comprehensive view of your financial situation so you can make the most educated decision on what you can and should do.

 

I’ve found as a general rule, that most people are able to start investing in their current situation.

 

Starting doesn’t have to be huge.

 

I do not encourage my clients to try to start investing 1000’s of dollars a month. When my wife and I first started, we were doing 50 dollars a month because that was what we could afford.

 

While that may not seem like much, it helped me get in the mindset that investing was possible and the amount I invested didn’t really impact my quality of lifestyle.

 

Misconception 6: I do not have the time to figure out investing

This misconception harkens back to misconception number 4 a bit.

 

The lack of understanding in a serious concern for people and because of this lack of concern they generally avoid the market, rather than take the time to learn about the market.

 

This lack of understanding is one of the biggest reasons Kevin and I started both our Website and our Podcast – the Financial Feast Pod.

 

We found that lack of financial education was a serious concern for why people were making poor financial decisions and we wanted to help remedy that.

 

We believe that helping people both through our blogs, which you are reading now, and our podcast, we can help inform and educate people financially so they can feel more secure in the decisions they are making.

 

You should never blindly follow someone’s advice on something.

We want you to be empowered and confident that you know on your own to some level what should and should not be done.

 

Take the time and listen to podcasts. Talk to financial professionals. Watch YouTube videos. Read a book.

 

If your financial well-being is a priority to you, you will find the time.

 

Misconception 7: Its too late for me to start investing

Of all the misconceptions of retirement we chatted through, this one holds the most water.

 

I can see where those in their 50’s would really be overwhelmed by the idea of investing, especially if they haven’t started yet.

 

The solution to this one is quite simple though: start now and save more.

 

The benefit of starting to invest younger is you have the benefit of compound interest on your side.

 

What that does is it allows you to save a shorter amount of money over a longer time period to get to a good retirement amount.

 

If you start, say 20 years later, it is certainly possible to hit the same number, but you need to invest significantly more money.

 

But it is possible!

 

With commitment and a good focus and strategy, you can have financial success even at a later age.

 

Hopefully you’ve seen through all these different misconceptions, that there are simple remedies and answers.

 

Being overwhelmed by retirement and the process of saving for it is understandable. Saving for retirement doesn’t have to be complicated though.

 

Don’t allow these retirement misconceptions scare you to not making a great future for yourself.