Debunking popular retirement myths
The idea of retirement strikes us all differently.
And timing, of course, is everything. There are the Barry Sanders’ (who went too soon), the Muhammad Ali’s (who went too late) and the Steven Segal’s (who should probably go – like … now).
But all that considered, there’s no true answer to when you should give up work. The notion you’re to retire by age X is just a myth; everyone’s job/lifestyle circumstances are not alike.
Is that the only retirement legend that’s ripe to debunk? Of course not.
In fact, BMO just released six end-of-career theories that may need some retooling:
1. “I will have enough with the Canada Pension Plan/Quebec Pension Plan and Old Age Security payments from the government.”
2. “I am fine; I have a company pension plan.”
3. “I need 70 to 80 per cent of my pre-retirement income.”
4. “I’ve heard I need to save $1 million.”
5. “I will be fine if I only withdraw four or five per cent a year from my savings once I retire.”
6. “Delaying my retirement a few years will not make that much of a difference.”
Let’s look at a few of the list’s more prominent presumptions, nos. 3 and 4.
The chief factor in retirement, aside from when, is how much cash we’ll need to stay afloat during the golden years.
Yet thinking eighty per cent of your pre-retirement income will be needed to live is a little lofty, according to many experts. Famous Mercer actuary Malcolm Hamilton suggests the modest among us can get by on 50 per cent or less – a stance that features one major condition.
Most retirees, the Financial Post’s Jonathan Chevreau points out, tend to splurge on some kind of trip or landmark purchase right out of the gate: a car, second honeymoon, whatever. If that’s your plan just as you’ve retired, this myth may actually prove true.
But will you need $1 million in personal savings, though? Not likely.
While that number may be close to what higher-income retirees may shoot for, that figure is shooting a bit high for many of us.
“If you have a company pension plan and government pensions … you may need just $400,000 in personal savings: 20 times $20,000,” says Chevreau.
What are the myths you’ve encountered in your journey to retirement?
By Jason Buckland, MSN Money
Comments