The number of myths and misconceptions are plenty when it comes to retirement and retirement planning. Some of these misconceptions are held by retirees and preretirees because of personal biases, lack of knowledge, or wishful thinking, and some are circulated in the industry by media and financial professionals. Not addressing these misconceptions means many consumers will discount the realities at the risk of ruining their retirement security.
There are many risks in retirement, and for several, its outcome is pretty uncertain. No one can predict how many years they will live, the rate of inflation, interest rates, market returns, health status, or healthcare costs. The best retirees and pre-retirees can do is to become knowledgeable about the risks, get help from advisors, and reduce some of the uncertainties in retirement.
Myths and misconceptions get in the way of planning well for a secure retirement. Some of the myths are quite dangerous. Take for example, underestimating longevity. It could result in serious planning errors such as not saving enough, not purchasing guaranteed lifetime income products, or not addressing a spouse’s income risk if the other dies, thereby potentially running out of money or significantly changing lifestyles. A plan is only as good as its underlying assumptions. The media, advisors and their firms, government, and organizations like the LIMRA Secure Retirement Institute should take proactive roles in debunking these myths and educating consumers.