From knowing when to retire to determining how much savings are “realistic,” The Wall Street Journal suggests that retirees do not know as much about retirement as they think they do.
“It’s not all golf and grandchildren,” writes WSJ. “Many people spend years planning for retirement and think they have it all figured out, until they actually retire.”
For one, retiring earlier than expected is a strong possibility. A recent survey by the Employee Benefit Research Institute (EBRI) found that 22% of workers expect to wait until age 70 to retire, however, only 9% of retirees actually retired at that age.
Though the circumstances may vary as to what forces people into earlier than expected retirement, those who do run the risk of drawing on their investments sooner than expected as well.
Additionally, those who plan to work during retirement may find it difficult to rejoin the workforce as they age—WSJ’s second retirement myth. The EBRI study found that while roughly two-thirds of retirees said they plan to work in retirement, only 27% report actually doing so.
Thirdly, buying a second home to live in part time before selling one’s primary home might not be such a good idea in the long run, the article suggests, especially as maintaining the property can become difficult with age.
“Our experience with the second home has generally been that they are expensive, a hassle and a mistake,” said one California financial advisor in the article. “Clients could stay at the Ritz-Carlton when they go to their second-home area for far less, and with none of the hassle of frozen pipes, neighbor disputes, volatile housing values.”
Another myth regards retirees’ misconception of what types of healthcare services Medicare covers.
Traditional Medicare covers just 48% of an enrollee’s health costs, according to Kaiser Family Foundation data cited by WSJ, but it does not cover services such as dental care, eyeglasses and hearing aids. Also, supplementing Medicare with a Medigap insurance policy to help cover these costs can be expensive, with an average premium as much as $2,200 a year in 2010.
Lastly, knowing how much money to set aside to maintain a standard of living during retirement is the final myth.
There is a misconception among retirees that they will spend less when they are no longer working, however, many retirees may not account for the general rise in out-of-pocket spending that occurs as they now have more time to go out, shop and travel.
Read more at The Wall Street Journal.
Written by Jason Oliva