Debunking the 5 Biggest Retirement Myths

8:33 pm Retirement Planning

no 150x150 Debunking the 5 Biggest Retirement Myths1.  You Will Spend Less Once You Retire.  Studies show that Americans over the age of 65 spend almost 95 percent of their income, compared with 78 percent for the average American under the age of 65.  After retirement, spending on travel and entertainment often increases significantly, which more than offsets the drop in spending on education and pension contributions.

2.  You Can Count on Uncle Sam.  Recent studies show that most people approaching retirement have no idea how much Medicare does NOT cover – like dental, eye care and some prescriptions.  The government rarely covers home health care or nursing homes, which can take a big bite out of retirement budgets.

3.  If You Move, Your Money Will Last Longer.  Retirees who flock to non-income tax states like Florida, Texas or South Carolina find that sales and property taxes are generally higher – and increasing to meet state budget shortfalls.

4.  Healthcare is the Biggest Retirement Expense.  Actually, the top expense in retirement is taxes.  The assets you put aside that have enjoyed tax deferral are now being withdrawn at ordinary income rates, which means it’s important for you to have a retirement strategy that enables you to tap your accounts in the most tax efficient way.

5.  The Magic Number is $1 Million.  It’s not so much about the number, but how you arrive at it that matters in the end.  Many retirees find that they have not accurately estimated or planned for unexpected expenses, liking taking care of an aging parent or an unemployed child.  Advisers are now telling clients to think of their number as a baseline, not an absolute.

For help with retirement planning, contact our Orange County law firm.

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