If you don’t use a retirement planner, finding retirement advice can be scary. Some may have a tendency to comfort themselves in “myths,” pieces of information that are general, and don’t necessarily relate to any specific individual’s life: information that may or may not be true. See if you recognize any of these oversimplified myths in your own planning.
Just go by the numbers.
If you skim retirement articles online, you’ll be overwhelmed with facts and figures. You may also notice that a lot of these figures tend to be generally agreed upon, repeated, and part of the “main stream” of financial planning. You retire at 65, if you’re like most people. You’ll probably need about $1 million to retire comfortably. You need to save about 15% of your paycheck. Invest in 60% stocks and 40% bonds and you’ll be fine. Oh, and a safe rate of withdrawal once you’re retired is roughly 4%. I’m not throwing these numbers out as invalid, but rather noting that they are suggestions which were developed independently from your situation. Be careful with this kind of information, because it was built on a certain set of assumptions, and no one should build a retirement plan on assumptions.
Medicare should be enough.
Medicare, the insurance system in place for seniors, has a variety of pros and cons. While the program may take a majority of the burden from the shoulders of many retirees, it’s not possible that it can be the perfect fit for everyone. One example? 70% of seniors need some form of long term care in their life. A lot of individuals out there will want to take the extra steps to hedge yourself in from this liability.
Depending on your situation, other components of Medicare may not meet your needs. There are four separate components of Medicare, and some portions require you to have worked long enough to qualify for the coverage without paying a premium. In short, it’s best to look at your situation—and future situation—in order to adequately support you and your family’s health.
Social Security will probably get me there.
The question of where Social Security fits into your retirement plan (your Social Security benefits are not a retirement plan!) is a crucial one. A majority of people do rely on Social Security for a large piece of their income, but it is not a good idea to assume that the program will stand as your sole bread and butter. Some may not be aware that Social Security income may be taxed if you earn more than a certain amount—at this time over $32,000 combined if you filed jointly with your spouse. See a tax professional to help you calculate how much you’ll be taxed—and how far the benefits will go for you.
With the importance of having complete and personal information in your plan, a retirement planner who knows your needs can be invaluable. If you feel that going off assumptions isn’t for you, Miramontes Capital is just a call away.