Retirement concerns are unavoidable, especially that there will come a point that you have to take the path of your retirement life and start saving money to secure your financial needs or the future of your loved ones. But most of the time, many individuals still fall on the ditch when it comes to prioritizing their retirement investment due some misconceptions and mistakes that arises in their mind. Retirement life should be planned carefully, but because of some misconceptions and fears when deciding for their retirement savings, many of them ruin it due to some unavoidable mistakes. To eliminate your fear in terms of retirement savings and help you be prepared on your retirement life, you need to first know the truth about the 6 common mistakes that affects retiree’s decision making:
You should have to acquire specific set of percentage based on your current income for a comfortable and secured retirement life.
Though many financial professionals suggests retirees to save at least 80% of their current income to have enough savings for their retirement, there is really NO specific set of number that needs to be followed. If you want to know how much money you’ll need, you should first calculate your necessary post-retirement income with the anticipated cost, but not based on your current lifestyle. in fact, there is no ‘magic number’ which will get you set for your retirement because the worth of the money can still go down, thus, it would be much better if you would save as much as possible.
You can rely on your social security
Even if you applied for a social security when you retire, you will still need to save some of your income for you to live a comfortable retirement life. Remember, social security benefits isn’t always stable, and though social security are likely to stay for a long time, the amount being paid out or eligibility age can be both changed. Furthermore, don’t assume that your Medicare will cover all either. Take care of your own health now and set some savings or budget intended for medical expenses when you plan for your retirement.
Your Taxes will be lowered when you retire
Well, you may earn less and that can put you on a lower bracket. But on the other side, you will also end up saying goodbye to some of your deductions & exemptions that you enjoyed while still working. Furthermore, state or local taxes may increase over time, so while you while your income earned may decrease, you may also end up losing a comparatively large percent of it to your taxes when you retired.
The Safer your savings, the better your financial is
While it may be true that your saving can be safe in savings account, CD, bonds, but in theory, you’ll make a little interest which will not really help with your retirement. Being safe is one of the popular way of saving money, however, it not really a very lucrative way, so it’s better to diversify your investment as possible.
You’ll live less when you retire
There are many people are thinking that those retired individuals, especially those who are in eighties and seventies are living modestly or out of necessity because they are hardly asking for senior discount. But little did we know, the first new phase of retirement life can mean more fun, thus opening an opportunity to worry less, travel free and seek new adventures.
Your kid’s college cost can be a second priority since they can just avail a financial aid
Though there’s no such thing as ‘retiree’s financial aid’, it is still very important to secure the future of your kid’s education. Yes, your student may acquire financial aid, but there are some rules and limits as to availing the program, where your kid may not fall under the eligibility. So putting their future financial needs should be highly prioritized.