Retirement planning is a practical necessity that far too many Americans overlook. According to some estimates, up to 50% of adults ages 55-66 have no personal retirement savings whatsoever. While many adults expect to ride out retirement on Social Security disbursements and investment dividends, many of these “time-tested” strategies no longer work, forcing retirees to dig into their families’ inheritances to stay happy and healthy.
Avoid These Five Retirement Planning Myths
An ill-conceived retirement plan can have consequences far beyond an uncomfortably constrained lifestyle—as costs mount and become unsustainable, retirees may be forced to reallocate funds they had intended for inheritance.
However, you do not have to leave your legacy up to chance. Here are five retirement planning myths to avoid.
#1: “I’ll Pay Less Money in Taxes After I Retire”
You certainly won’t have to pay some employment-related taxes after retirement, but that doesn’t mean you’ll pay a lower tax rate, let alone enjoy a tax-free retirement. You may still be subject to withdrawal penalties and higher-than-expected taxes on your 401(k), individual retirement account, or work-based pension.
Under certain circumstances, you might even pay a higher tax rate than when you were working.
#2: “Social Security Will Cover My Expenses”
Social Security is an underfunded system that even the federal government admits cannot meet the needs of most retirees. With an average payout of $1,413 per month, Social Security checks are rarely adequate to cover older adults’ basic needs, let alone the high costs of medical care and assisted living.
#3: “If I Start Running Low on Money, I’ll Get Another Job”
Two-thirds of retirees say they plan to work, whether to supplement their Social Security income or to occupy a sudden abundance of free time.
However, most older adults struggle to find stable employment opportunities, in part because many companies prefer hiring younger workers.
#4: “Medicare Is an Affordable Alternative to My Old Employer-Sponsored Plan”
California may offer robust Medicare benefits, but standard coverage scarcely covers half the average retiree’s annual health costs.
Furthermore, Medicare does not always provide benefits for long-term care or in-home health aides—necessary expenses that can cost tens of thousands of dollars each year.
#5: “I Won’t Spend as Much Money in Retirement”
Contrary to popular belief, spending typically increases after retirement—especially among retirees who enjoy travel or staying active.
Contact an Experienced California Estate Planning Attorney Today
Retirement all too often comes at an unexpectedly high price. Without the right preparation, the hidden costs of retirement can eat into your estate plan, robbing your family of the inheritance you intend to leave.
The Law Firm of Kavesh, Minor & Otis can help you navigate the challenges of retirement and estate planning, suggesting custom-tailored strategies that accommodate your family’s needs and suit your post-retirement aspirations. Please send us a message online, or call us today at 1-800-756-5596 to schedule your free initial consultation.