What are Common Retirement Misconceptions?

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Retirement misconceptions can lead to poor planning strategies.

Retirement is a significant milestone for many Americans.

Many create plans for what they will do when they no longer punch the clock.

Whatever these plans may be, they require money to happen.

You need to start saving financially and investing in your future.

According to a recent Investopedia article titled “7 Counterintuitive Retirement Strategies,” retirement misconceptions can easily derail your financial planning.

Retirement misconceptions create problems for you future.
Retirement misconceptions can leave your accounts empty.

What are some common retirement misconceptions?

You should be constantly trading.

A buy-and-hold strategy is not a losing strategy.

Studies show holding stocks for longer periods of time actually benefits grown.

Why is this?

The stock market typically has positive returns over ten-year periods.

Stock and real estate consistently outpace inflation over time, even with years of market loss.

One can expect this trend to continue.

Even so you will want to periodically review your portfolio to adjust for its performance and ability to meet your goals, especially as you near retirement.

If you do not sell at a loss, you have no loss.

When the value of stock declines, there is a loss.

Your accounts will show you have less money available.

The loss will not be recognized by the government if you do not sell the security or stock.

When you make a sale, you can claim a loss on your tax return.

You should let your money managers handle everything.

Working with professional and experienced financial planners is certainly beneficial to your retirement planning, but you cannot abdicate your personal responsibility.

Avoid this retirement misconception by staying engaged, asking questions, and updating your planner on changes in goals or income.

Do not sell then repurchase an investment.

In many instances, it may be wise to sell an depreciated investment to so it can be recognized as tax deduction in your filing.

If you do purchase an identical stock 30 days before or 30 days after the date of sale for your original stock, you will trigger the IRS wash sale rules.

The results?

Your capital loss claim will be void.

Social Security benefits will be enough to pay for retirement.

This retirement myth could get you into deep financial trouble.

On average, monthly Social Security payments for retirees was only $1,471 in June 2019.

Yikes!

Benefits do vary significantly from person to person, but they were never meant to replace your full income.

In fact, they are designed to cover no more than 40 percent of your pre-retirement income.

All of my retirement money should be in secure income-oriented investments.

Although these low-risk vehicles are a higher priority when you are near or in retirement, growth can still be beneficial.

Many retirees still benefit from having savings in mutual funds or individual stocks.

Retirement planning can wait.

This is perhaps the most dangerous retirement misconception.

By saving and investing early, you can allow your finances to grow.

You will need money to sustain you in retirement.

Start now.

Reference: Investopedia (Oct. 21, 2019) “7 Counterintuitive Retirement Strategies”