It’s meant to be one of the most relaxing periods of your life – but follow the wrong advice and retirement can be an absolute financial nightmare.
Unfortunately, particularly with the development of the internet, there is all sorts of financial misinformation out there – many of which can sincerely hurt you if you read too much into it.
Bearing this in mind, here are four of the most dangerous myths related to finance and retirement. Stay away from these, and life after work will suddenly feel so much easier.
Myth #1 – Delay saving until your retirement age
In truth, all of the myths we discuss are dangerous, but this first one is perhaps the scariest.
Planning for your retirement doesn’t start at 65 (or your retirement age), it starts long before that. You need to accumulate enough money to live during those years when you won’t be earning a salary and if you start too late, you could find yourself in all kinds of trouble.
Myth #2 – Your lifespan is somewhere between 75 and 85
This is probably one of the most common thoughts – and it doesn’t just affect those people who are nearing retirement age. The general consensus amongst most of us is that we’ll live that long – and we’ll plan financially for this.
Sure, the actual average life expectancy is in this range, but that certainly doesn’t mean to say that you will fall within it. You might surpass that by two decades, which could leave you with a gaping financial hole if you haven’t planned accordingly and have just opted to spend recklessly.
Make sure you have enough money to tide you over. Not only that, but make sure you make suitable provisions for when you do pass away, such as through pre-paid funeral plans. This suggestion can at least mean that your family avoid paying an inflated cost when the time does come.
Myth #3 – You won’t need much money after you retire
Underestimation is one of the biggest mistakes people make in relation to retirement. Unfortunately, studies have shown that over half of retired people spend at least 95% of their pre-retirement income during this phase of life. Considering the fact that it’s often a lot shorter, this is a huge amount of money and suggests that people tend to seek a more “expensive” lifestyle.
You might be a person who actively tries to avoid this, but it’s probably not safe to assume you won’t be spending as much during these latter years.
Myth #4 – The government will ensure you have a happy retirement
There are all sorts of rules in relation to pensions and in truth, many are beyond the scope of this guide. A lot of people who are on a state pension think that it automatically means the government will look after them and their retirement.
Unfortunately, it’s not. You will of course get some aid, but it will only be as much as your contributions have dictated. Additionally, state pensions aren’t as secure as they once were and if you happen to be quite a distance from retirement, you probably won’t receive as much from the system as you once may have.