Get the app
Get the app

Join millions of investors on Stash

Investing, simplified

Start today with as little as $5
Get the app

Believing These Retirement Myths Might Leave You in a Lot of Trouble

January 11, 2019
retirement myths

3 min read

Flying saucers, the Boogie Man and the Tooth Fairy are myths that aren’t necessarily going to wreck your financial life. Unless, of course, you sink all of your savings into becoming a professional “Squatcher.”

There are, however, some myths that can have a real, tangible effect on your life. Especially financial myths, including those related to investing, the stock market, or even the Federal Reserve.

But perhaps the most dangerous myths involve retirement—a longstanding but false belief about retirement, for example, can leave you financially crippled just as you’re getting ready to leave the workforce.

Here are some common retirement myths that could lead you down a path to financial ruin.

Myth: Retirement happens at a certain age.

Wrong. Retirement is a financial state, not an age.

While you will qualify for Social Security benefits at age 62, those payouts likely won’t be enough to live on. (The average monthly check, as of late 2018, was approximately $1,300.)

That’s why you won’t necessarily be able to stop working in your 60s—you’ll need enough money to supplement any benefits you do receive in order to cover your expenses without a paycheck.

Worth noting: 10% of respondents to a recent Stash retirement survey say they’ll never be able to retire.

retirement myths
See Disclosure1

Myth: Life is less expensive as a retiree.

You may think that life is cheaper when you retire. You’re not spending money commuting to work, for example, and you’ll be able to take advantage of all those senior discounts!

While some things may be less expensive, you’re likely going to be spending more on things like health care.

Industry data shows that the average couple should plan to spend $280,000 or more throughout the course of your retirement on health care after they retire. Even if you eat strictly from Denny’s 55+ discount menu, you might find it difficult to offset those kinds of costs.

Myth: Medicare will cover all of your health care expenses.

Of course, you may be thinking that Medicare will cover your health-care expenses. It won’t, unfortunately, which is why you’ll need to have enough money squirreled away to supplement Uncle Sam’s health care plan—for someone age 65, out-of-pocket expenses tend to be around $4,500 every year.

It’s also important to remember that Medicare isn’t completely free. The plan is divided into four parts, which cover different medical services, and some of these have individual monthly premiums.

While the actual costs will vary from person to person, health care, as a whole, is getting more and more expensive. So, you may need more money than you anticipate to cover those costs years from now.

Myth: You can count on Social Security.

You can depend on Social Security, right?

Maybe. The Social Security trust fund could run out of money—as soon as 2026, according to some estimates. That means that, at some point, government officials will have to make some tough decisions, otherwise, tens of millions of people could lose their benefits.

While the inevitable fight to fund so-called entitlement programs lies ahead, you should also be concerned that any benefits you do receive will be enough to cover your bills.

Myth: “I’m too young to worry about retirement.”

You’re never too young to start thinking about retirement. Remember, you don’t necessarily retire once you hit a certain age—you retire when it’s financially feasible. And the sooner you start planning and saving, the sooner you’ll hopefully be able to stop working.

See disclaimer2

Read more: Under 25? Start Your Retirement Planning Today

Start saving for a long retirement today, rather than putting it off.

You can sign up for an IRA using Stash.

Make your future money

Learn more about Stash Retire

Start now

By Sam Becker

1: The survey of 2,167 adult consumers, was conducted online by SurveyMonkey in November 2018. Of those surveyed, 47% (1022) identified themselves as male, 53% (1145) identified themselves as female. Seventy percent reported earning less than $75,000 annually.
2: This is a hypothetical illustration of mathematical principles, is not a prediction or projection of performance of an investment or investment strategy, and assumes weekly contributions at an annual rate of a 5% return (compounded annually) and does not account for fees or taxes. It is for illustrative purposes only and is not indicative of any actual investment. Actual return and principal value may be more or less than the original investment.


Next for you
Introduction to Retirement

Investment Profile

Bonds Worldwide

An International Bond ETF on Stash

Learn more
Explore more articlesChoose a topic to learn more about
social media Technology Careers politics love and money

This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Stash assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.

Furthermore, the information presented does not take into consideration commissions, tax implications, or other transactional costs, which may significantly affect the economic consequences of a given strategy or investment decision. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services, and should seek advice from an independent advisor before acting on any information presented. Before investing, please carefully consider your willingness to take on risk and your financial ability to afford investment losses when deciding how much individual security exposure to have in your investment portfolio.

Past performance does not guarantee future results. There is a potential for loss as well as gain in investing. Stash does not represent in any manner that the circumstances described herein will result in any particular outcome. While the data and analysis Stash uses from third party sources is believed to be reliable, Stash does not guarantee the accuracy of such information. Nothing in this article should be considered as a solicitation or offer, or recommendation, to buy or sell any particular security or investment product or to engage in any investment strategy. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. Stash does not provide personalized financial planning to investors, such as estate, tax, or retirement planning. Investment advisory services are only provided to investors who become Stash Clients pursuant to a written Advisory Agreement. For more information please visit www.stashinvest.com/disclosures.