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Misconceptions abound as the world has dramatically changed. Life expectancy has risen while financial security has eroded. Previous generations worked their entire career at the same company earning a pension. Not so much anymore.

Retirement myths and realities exposes and debunks the most commonly held beliefs. These include:

  • Everything will be wonderful, if you saved enough.
  • Expenses will decrease.
  • You’ll retire when you planned.
  • Pay off your mortgage or not.
  • Your marriage will be better than ever.

The problem is we tend to still perceive everything through the lens of our parents. That's only natural however everything has changed.

# 1: Everything Will be Wonderful, if You Saved Enough

One of the most common retirement myths and realities is everything will be wonderful. The caveat, as long as you put enough money aside. All this does is create a false sense of security!

There’s so much more to consider than how much you saved (or didn’t).

For example, a conversation I had with teacher some time ago. An otherwise educated intelligent woman who echoed these same sentiments. She was frustrated beyond belief with all the cutbacks and class sizes. As much as she loved her students, it had become almost impossible to do her job.

The school board offered a series of “workshops”. They were hosted by a local financial advisor going over every facet of the numbers. Not only was she ready, she was counting down the days.

Much like an extended vacation, she was going to kick back and enjoy life. In fact, things would get even better after she turned 62.

Reality

Almost everything you hear about planning and preparation is synonymous with money. Instead of thinking of “what you’re retiring to”, we’re conditioned to focus on “retiring from”. And that’s all about the money.

General advice suggests you should have 25 times your annual income set aside. This supports the 4% rule to ensure sufficient income throughout the remainder of your life. For the average person, an income of $40K a year means they should’ve saved a million dollars.

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Clearly this isn’t realistic for most folks. In spite of their best efforts, they’re way behind on their savings. According to Insured Retirement Institute, about 45% of would-be retirees have zero savings. Baby boomer facts expands upon these and other alarming statistics facing our generation.

As a result, the majority of people focus almost exclusively on money. They can’t afford to retire. They’ve got to keep working or they’ll suffer a miserable existence. On a side note, how much to save reveals you may need less than you otherwise thought.

For those like my teacher friend, as far as they’re concerned, they’re good to go. What could go wrong? They’ll figure it out as they go. How to write a retirement plan documents those other aspects.

# 2: Expenses Will Decrease

Almost everyone assumes their living expenses will decrease after leaving work. Some of the numbers bouncing around suggest you’ll be comfortable with 70-80% of your working income.

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Reality

It’s a little more complicated than that.

Depending upon your retired lifestyle, your expenses might decrease, stay about the same, or even increase your overall spending.

Taking a frugal approach, it’s certainly feasible to reduce expenses. This might entail sticking to a budget, downsizing, relocating to a less expensive area, selling a second vehicle, and so on.

Maybe that’s not in the cards for you, at least in the near future. You should still be able to reduce costs, right? No more daily commute, lunches out, and all those other work-related expenses.

Now that you have a whole lot more free time, what are you going to do? Any hobbies or activities could increase your spending. Such as a gym, golf, or other membership. Any travel plans can also add up. Subject to your age and circumstances, healthcare insurance premiums also need to be considered.

# 3: You'll Retire When You Planned

Almost everyone has an opinion on when they’ll retire. Usually, it’s based on age or financial preparation. Somehow, the collective belief persists we have control over when we leave.

It used to be cut and dried. Our parents worked until their 65th birthdays. Many of them, employees of the same company throughout their career. After decades of faithful service, they were rewarded with a big send-off and a pension.

Reality

Over half of all retirees leave earlier than otherwise planned. This can be due to health issues, company downsizing, or economic downturn. Once you leave work, getting another decent paying job becomes increasingly difficult.

According to ProPublica and the Urban Institute, 56% of those over the age of 50 have experienced employer driven job loss.

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# 4: Pay Off Your Mortgage or Not

Popular advice is to pay off your mortgage and be debt-free. Just like the saving conundrum, many folks are behind. In spite of their best intentions, sometimes it’s not realistic.

As an example, a family member was transferred across the country throughout his career. Every five years or so, he was relocated which meant selling the house and taking out a new mortgage. Most of the time, after factoring in real estate and legal costs, he wasn’t much further ahead.

Over the past 30 years, the housing market has outpaced salary increases. Even making money on the old house usually meant the next one was that much more expensive. Thus, total debt kept increasing.

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Image from Wikimedia.org

In comparison, my acreage cost $140K back in the early 1990s. Today it’s worth over $500K and long since paid it off.

Did I ever mention he might be the most stubborn and obstinate person I know? I share that because he has a high stress job. He’s complained it’s probably taking years off his life. Yet, he’s determined to pay off his mortgage before retiring.

Reality

For our parents, home ownership was a big deal. And back then it was.

Nowadays, everything’s changed. Interest rates are at all-time historical lows. Property values increased dramatically. If you have a significant mortgage, it might make more sense to refinance and reduce your monthly costs.

Is it that important to payoff a home? Homeownership isn’t cheap when you consider all the maintenance, taxes, utilities, and other associated costs. And then, you’ve got all your equity tied up.

A growing trend has been to downsize to something smaller and easier to maintain. Alternatively, relocating to a lower cost part of the country, closer to family, or sunnier climate. Further to this, as we age our needs will change.

For instance, the average couple might initially relocate closer to family and grandchildren. Then they might move into a senior community and eventually require assisted living.

# 5: Your Marriage Will Be Better Than Ever

Of all these retirement myths and realities, do you really believe your marriage will improve? After all these years you’ll be able to share more quality time together. This might include visiting a son/daughter or grandchildren more frequently. This could also be the time for travel and your bucket list.

Reality

Even happily married couples need to adjust to being together much more. This may entail re-division of household responsibilities, respecting each other’s private space, and having outside interests and friendships. The key is maintaining open communications and prioritizing your relationship.

In other situations, they’ve grown distant from each other becoming more like room-mates. Will your marriage survive captures the dynamics many couples will experience.

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In some respects, the stay-at-home orders were a “dry run” stress testing our relationships. Marriages on shaky ground often erupted after being cooped up under the same roof. According to the Daily Mail, divorce rates soared by 34% during the first four months of the pandemic. Without a doubt, it's stressed many relationships.

Closing Thoughts on Retirement Myths and Realities

As we’ve often stated, these should be your golden years. The time in life to self-actualize and truly enjoy all you have achieved. Unfortunately, clinging to outdated beliefs could be a recipe for future difficulties and disappointments.

The world has changed. We, either, adapt or find ourselves stuck in a rut. With potentially another 20 or 30 years to go, it's time to let go and embrace life with open arms.

  • While those exceptions and realities are all too common I have to say for this boomer none of them have happened. I retired with more money than we’ll need, I did retire earlier than I planned because I finally realized making more money was insane when I had plenty. My marriage was always solid but having been retired five years its the best its ever been. We do a ton of things together but also have friends we do things apart with. We paid our mortgage off many years ago on our modest and only house we’ve been in for the last 41 years. Expenses are right about the same level as when working.

    • Thank you, Steve. You are an inspiration and retirement success story. I love how you mentioned your marriage has been solid and gotten even better.

      Would you be interested in doing a guest post about making your marriage “the best its ever been” after retiring? If you’re interested, let me know at [email protected].

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