In 2020, 3.2 million American Baby Boomers retired. That’s more than double the amount who retired in 2019.
The fallout from the COVID-19 pandemic likely had a lot to do with this increase. But, such figures in combination with common retirement myths only serve to fuel the anxiety that plagues our aging – yet often underprepared – population.
The truth is, going on retirement doesn’t have to mean financial hardship. But nor are there any guarantees that it won’t, especially if aging adults can’t separate fact from fiction.
So, what are some of the common myths about retirement out there? Let’s take a look!
Myth 1: I’ll Live In the Same Place
If your mortgage isn’t already paid up, you likely assume that it will be before you retire, taking care of your housing forever. But moving house is often a major part of retirement.
Aging parents often want to be closer to their kids and grandkids. Or you may decide to swap your family-sized home for an independent or assisted living situation. Whether you need elderly care or not, these senior living floor plans are better suited to retired individuals and couples than a family house with no end of cleaning and maintenance requirements.
Myth 2: I’ll Spend Less and Pay Less Tax
Aging adults don’t all start to wind down and spend less once they hit retirement age. If you dream of filling your extra free time with traveling, visiting family, and pursuing new hobbies your spending might even increase.
There are no guarantees that you’ll pay less in taxes either. If going on retirement leaves you collecting the same income, you may not qualify for a lower tax bracket. What’s more, tax rates might rise in the future, and you’ll be ineligible for fewer tax breaks so your tax payments might even increase.
Myth 3: I’ll Work as Long as I Need To
Going on retirement used to mean clocking off for good. But nowadays, 74 percent of workers plan to continue working well into their retirement years. In reality, however, only 27 percent of retirees say they were able to do so.
Whether it’s due to illness, disability, or fewer senior citizen employment opportunities, these aren’t the kinds of odds you want to bet your future finances on.
Myth 4: It’s Too Late to Save for Retirement
No matter how close you are to retiring, there’s still time to boost your retirement savings.
The only catch is that the older you are, the more you have to start putting away now. For example, a 40-year-old earning $4,000 a month would amass a nest egg worth almost $1.2 million by saving 15 percent of their income. In contrast, a 50-year-old saving 25 percent of the same income could have around half that by the time they hit 67. Either way, anything is better than zero!
Debunking Common Retirement Myths
Now we’ve debunked these common retirement myths, you should have a better idea of the reality that many senior citizens are facing today.
But, the good news is, even if you’re close to going on retirement, the fact is, there’s still time to plan for your future.
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