Halloween is known as spooky season, but that shouldn’t apply to your retirement! Most people have preconceived notions of what retirement will be like whether that’s good or bad. But with proper planning and education, you can feel confident going into your golden years. Here are a few common myths about retirement you should beware of:
Everyone hopes that taxes will decrease in the future, but that’s not usually the case. No one can predict the future which is why it’s important to structure your retirement income to prepare for whatever the future may hold. This can be done by contributing to after-tax accounts like a Roth 401(k). Unlike a traditional 401(k) in which you contribute funds pre-tax (taxes are taken during the distribution phase of retirement), using an after-tax account like a Roth allows you to contribute funds after they are taxed. In other words, you won’t have to worry about tax legislation changes for those Roth dollars.
It’s important to keep in mind that if you decide to use an after-tax account like a Roth, you are limited to $19,500 up to age 50, then that limit increases by an additional $6,500. Of course, you still have your other account options that will be taxed in retirement as well. The important thing to keep in mind here is to diversify your portfolio.
Medical costs and long-term care can be difficult things to plan for and no one likes to think about it but planning ahead could protect you and your loved ones from the financial burden it can bring. Many individuals rely on Medicare but unfortunately it doesn’t cover all expenses. The good news is you can implement health care expenses into your financial strategy so you can worry less in retirement!
Myth #3: I Can Rely on Social Security for Retirement Income
Retirement is something you don’t get to do over again, which is why you want to get it right. The good news is there are professionals whose job is to help you succeed. When you work alongside a retirement professional, you’re not only bringing years of experience to the table — you’re working with someone who has access to several insurance carriers and other financial vehicles. You’re both working to find creative solutions to the same problem, but the professional has more tools to work with. Having the right person on your team can only help!
Planning for retirement can be stressful. But the planning allows you to live the retirement of your dreams. You don’t have to be burdened by myths that only add more stress. The more you know, the better off you will be. Start by finding a financial professional who can provide insight and answer your questions!
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