Reaching retirement is usually a pretty strange feeling. Having gotten used to all the ins and outs of adulthood, you're now moving into another stage of your life. Whether you're counting the days or you're dreading retirement, there are various financial decisions you're going to have to make. You may have heard some less-than-helpful advice over the years, so here are some of the big myths to ignore.
First of all, the myth that you can always work. Okay, this may be technically true. Now that you're getting on in your years, you may be dreading the idea that you're going to have to leave work. Aside from the income, work keeps up your physical and mental health, and gives you a reason to get up in the morning. However, there are a few factors which you won't be able to predict, and may throw your plans into the air. Your health could deteriorate in the future, your company could have a big lay-off, or you may need to take time off to care for your spouse. If you want to carry on working, then go ahead. Just don't make it an essential staple to your financial plans.
Another common myth is that you should focus on paying off your mortgage. I know that paying off debt sounds like it could never be a bad thing, and in most cases it isn't. However, you may find yourself in a situation where paying off your mortgage isn't the best move. Okay, paying off your home can give you some peace of mind, but it may not be the best financial decision you could make. It all depends on the interest on your home loan. It may be a better decision to call a real estate agent, downsize, and then invest your capital in something that has a higher yield. Of course, sometimes the decision is more emotional than financial. If you want to hold onto a home that means a lot to you, then forget the money!
Another myth which you may have created yourself is that you need (x) amount of money per year to have a comfortable retirement. A lot of people start doing their retirement maths far too early. They calculate they'll need (x) per year, then set out a plan to put their current capital into safe investments, and have that money by the time they retire. You have to bear in mind that this will all be based on the value of the dollar today. Inflation rates are notoriously unpredictable. The further away your retirement is, the more danger there is in this kind of approach. I know that planning your personal finances may be dreary, but you need to keep re-visiting your retirement plans as you get closer and closer. This will ensure that they don't come back to bite you when you finally quit your job.
If you've been believing any of these myths, then it may be time to re-visit your retirement plans. Do some deeper research, and the best plan will form more naturally.
Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author. He's been featured on The Consults Corner on TAE Radio, The Writing Biz, What's Your Story, and more.