As you plan for your retirement, you're likely to receive advice from various sources. While some advice can be helpful, there are also common misconceptions and bad advice that could derail your retirement planning. Here are three pieces of bad retirement advice you should avoid:
1. You Can Start Saving for Retirement Later
How many times have you said, ‘I’ll get to that tomorrow.’ One of the most detrimental pieces of advice is to postpone saving for retirement. The earlier you start saving, the more time your money has to grow through compound interest. Waiting too long can significantly reduce the amount you'll have available for retirement. Even small contributions early on can make a big difference in the long run. You’ll never regret investing early.
2. You'll Spend Less in Retirement
While it's true that some expenses, like commuting and work-related costs, may decrease in retirement, others, such as healthcare and leisure activities, may increase. What will your retirement look like? Create a plan with your spouse and identify what your wants and needs are for that season of life. Failing to account for potential increased costs can lead to underestimating your retirement needs. It's important to plan for a comfortable lifestyle in retirement, which may require maintaining or even increasing your current level of savings.
3. You Can Rely Solely on Social Security
Social Security is designed to supplement, not replace, your retirement income. Depending solely on Social Security may not provide enough to support your desired lifestyle in retirement. It's important to have additional sources of income, we recommend at minimum three streams of passive income, such as a 401(k), IRA, or other investments, to ensure a financially secure retirement and future!
As you plan for your retirement, it's important to seek advice from trusted financial advisors and sources. Avoiding these common misconceptions and bad advice can help you make informed decisions and secure a comfortable retirement. Start saving early, plan for realistic expenses, and diversify your sources of retirement income for a more fully funded financial future!