Exploding Retirement Myths

That’s what we do at Retirement Watch. There are many myths about retirement that continue to permeate discussions and lead people down the wrong paths. Here are a couple of articles discussing some retirement myths. They won’t be much news to readers of Retirement Watch or my books (though I don’t receive any credit in these articles). One is from the Associated Press via Yahoo! Finance, and the other is from The Wall Street Journal (subscription might be required).

MYTH NO. 3: You’ll need far less income in retirement to maintain the same standard of living.

This may be true in some cases, but it could be a life-changing mistake to count on it. Surveys of retirees have found that many spend as much or more in the early years of retirement than before they retired.

Because retirement spending habits vary so widely, many financial advisers frown on the traditional rule of thumb that you need 70 to 80 percent of your pre-retirement income to maintain your lifestyle. If you reach retirement and find that was a bad guesstimate, “you may quickly find yourself looking for work,” says Tim Steffen, director of financial planning for Baird Private Wealth Management in Milwaukee.

You may not need 100 percent of your earlier income. But take some time to analyze what you expect to spend in retirement in order to lessen any anxiety.