As I hold conversations with client about their retirement dreams, certain misconceptions seem more prevalent than others. Today, I have chosen to list the misconception along with the facts.
- “My spending patterns won’t change much when I retire.”
The reality is that, assuming you live long enough, everything will cost more in retirement. Retirees spend disproportionately more on items such as health care. Housing can also cost more if the current house is paid for and the new retirees decide to add a second home, to relocate or need the services of a retirement community.
(Source: Consumer Price Index; January 1981 through December 2015 through JP Morgan.)
- This misconception is a combination of “I’ll continue to work during retirement,” and “I don’t have to retire until I am ready.”
While 67% of employed Americans plan to work beyond age 65, only 27% actually achieve that goal.
Here are the top three reasons that cause people to retire earlier than planned.
- 60% of the people who intended to work beyond 65 cannot due to health reasons.
- 27% cannot keep working because the current employer either downsized or closes.
- 22% of the time, the person intending to work has to quit to provide care of a spouse or family member.
(Source for this section #2 is Employer Benefit Research Institute, Matthew Greenwald and Associates. March 2015 through JP Morgan.)
One of the key benefits of working with a professional is, in addition to knowing the truth, “plan for the worst and hope for the best.”
On behalf of Resonate, I invite you to review existing plans to see if they are still on track or to create your plan for the first time.