Whether you are in your tender twenties or nifty fifties, one thing is certain retirement will happen. But where do you see yourself when you hit retirement age? Sitting on the sandy beaches in Florida? Or working day to day til’ the good Lord calls you home. Whatever your plans are, if you fall victim to these myths, your retirement years will catch you by surprise.
Myth #1 – I’ll simply save on my own!
If your company offers a retirement package and you do not participate, you are essentially leaving free money on the table! Forget the returns on the market or your asset allocation…a company that offers dollar for dollar matching, provides an instant return each time you make a contribution into your retirement plan.
Not only are you leaving free money on the table, but participating in your company’s retirement plan has extra benefits too. Each dollar you contribute can also reduce your taxes and not to mention your earnings may grow tax-free until distribution.
Myth #2 – The Government will take care of me!
Be careful if you are relying on the government! The average Social Security benefit is approximately $1,100 per month! Will this amount be enough to sustain your financial lifestyle during your retirement years?
With the cost of necessities increasing and unexpected expenses bound to happen, relying on Social Security alone may not be enough. It is important to seek other financial alternatives to sustain your financial lifestyle during retirement.
Myth #3 = As long as I save something I will be alright!
Many of our parents and grandparents were provided pensions to supplement their retirement income. As a result, they were not required to worry about how much to set aside in their 401k or whether to choose small or large cap stock.
However, more and more companies are moving away from pensions and requiring employees to be responsible for what’s in their 401k plans. So it’s simply not enough to set money aside each month without doing a little research. If you are unfamiliar with investment choices, seek a financial advisor that can help you select your investment options carefully and ensure you are on the right track for retirement.
Remember, your choice, your future!
Kemberley Washington is a certified public accountant and a business professor at Dillard University. She writes the personal finance column “Saving Money” for Bankrate.com. Follow her on Twitter, Facebook or subscribe to her blog at kemberley.com.