Planning for your retirement is tough enough these days.
That’s why it’s important to avoid being misled by the growing number of myths surrounding the difficult job of preparing for and living in a financially comfortable retirement.
Whether it is just around the corner or way down the road, you probably think about it – the shape of it, the quality of it – and perhaps worry about it, too. That’s why you plan for retirement – to eliminate as many unknowns as possible and to chart the right course for you. But every solid plan needs a solid foundation. The good news is that in this electronic age, there’s lots of information out there. The bad news is there’s also a lot of misinformation out there. So to give your plan the solid foundation it needs, let’s dispel some myths and look at some basic realities of retirement.
Myth: Your financial health is the most important thing
Reality: Sure, having money definitely provides additional choices but the reality is that people tend to ‘right-size’ their lifestyle in line with their financial resources.
As well, many people enjoy fulfilling and meaningful retirements without having lots of money – by volunteering, through part-time work, or other appropriate lifestyle choices.
The biggest issue is your health – poor physical or mental health removes choices whether you have money or not. So your plan should include maintaining and improving your health and knowing how health issues will be handled before they happen.
Myth: The biggest risk to your retirement income is the stock market
Reality: Yes, poor investment returns early can have an impact, but avoiding the stock market by sheltering your investments in low-return vehicles such as Guaranteed Investment Certificates (GICs) may not be the answer. Unlike GICs, equity investments can provide the opportunity for the level of growth over the long term that can offset the effects of inflation. So, your plan should include strategies for accessing market growth while still protecting your income from the impact of a short term market turndown.
Myth: You’ll have plenty of spare time
Reality: Experienced retirees will tell you that they have little spare time. Life tends to expand to fill up time so your plan should ensure your time fills up with things that are meaningful to you.
Myth: You only work in retirement because of the financial need
Reality: Some people do work for financial reasons but many seek part-time, occasional or flexible work that provides social interaction, allows them to feel challenged, or provides a sense of accomplishment. So plan to talk to ‘working retirees’ about why they work and how they fit their retirement around it.
To eliminate all the retirement myths from your retirement realities, talk to me a Registered Retirement Consultant about creating the best retirement plan for you.