Retirement Myths
Craig Hackler, Financial Advisor, Raymond James Financial Services
It is an unfortunate fact that many
Americans spend less time planning
for their retirement than planning for
their vacations. All it takes is intelligent
planning – and a clear understanding of
the myths that hinder us from building a
secure retirement.
Consider the following myths:
Myth #1: I’m too young to worry about
retirement.
You’re never too young to
make plans. The sooner you begin saving
for retirement, the less you’ll have to put
aside. For example, if you want to have a
$200,000 nest egg by age 65, you’ll only
have to save about $26 a week if you start
at age 35. But if you wait until you’re 55 to
start, you’d have to put aside $233 every
week.
(Both cases assume that your money is
invested earning a hypothetical 9-percent
return. This example is for illustrative purposes
only and is not intended to reflect the
actual performance of any security.
Investing involves risk and you may incur a
profit or a loss.)
Myth #2: I won’t need much to live on.
Many experts estimate that on average, to
maintain your standard of living in retirement,
you’ll need 60 to 80 percent of your
pre-retirement income. And that income
has to continue to grow enough in an
attempt to keep up with inflation.
Myth #3: My kids will take care of me.
Most children want to lend their aging
parents a hand, but many can’t afford to.
About the time you’re ready to retire,
they’ll be paying their children’s college
tuition – and saving for their own retirement.
You’d be wise, therefore, to leave
the kids out of your plans.
Myth #4: Social Security will take care
of me.
Although it’s unwise to expect
Social Security to cover all your costs, you
can take steps to increase your benefits.
Work as long as possible. You can start
collecting Social Security at age 62, but
your benefits may be reduced by 20 percent.
If, on the other hand, you work until
age 70 you’ll receive even more.
Myth #5: I can’t afford to put money
away where I can’t touch it for many
years.
The truth is, you can’t afford not to
participate in tax deferred retirement
plans. Contributions to 401(k) and similar
employer sponsored plans may reduce
your current taxation. In addition, taxes
are also deferred on earnings, so retirement
savings have the potential to grow
faster than others do. Best of all, many
employers match all or part of your contributions
to employer sponsored retirement
plans, giving you money you would
not otherwise have. The one drawback is
that you may have to pay a 10-percent
penalty, plus current income taxes, if you
withdraw money out of a retirement plan
before you’re 59 ?.
What should you do? A comfortable
retirement requires looking the facts
squarely in the face – creating a realistic
plan that works for you. Of course, this
brief article is no substitute for a careful
analysis of your personal circumstances.
Before implementing any significant tax or
financial planning strategy, contact your
financial advisor, attorney or tax advisor
as appropriate.
Craig Hackler holds the Series 7 and
Series 63 Securities licenses, as well as the
Group I Insurance license (life, health,
annuities). Through Raymond James
Financial Services, he offers complete financial
planning and investment products tailored
to the individual needs of his clients.
He will gladly answer your questions. Call
him at 512.894.0574 or 800.650.9517
|
