ORLANDO, Fla. – You have saved all your life and career so, you can retire and be comfortable, but financial experts say many of us may not be as prepared as we think.
A lot of people are making major mistakes when it comes to their retirement because of myths and misconceptions.
“It’s imperative to start planning sooner rather than later,” according to Certified Financial Planner and Advisor Scott Perrone, from Retirement Orlando.
Research shows the average American will retire at age 66 and live until nearly 79. Experts suggest planning to have income for at least 20 years and some say even 30 years. Also, do not assume you will spend a lot less.
“When you’re retired you have more time on your hands. So, you have a more likelihood to eat out, travel, hobbies and various things that cost money,” Perrone said.
Also, do not expect medicare to cover all of your health expenses. The average 65-year-old couple will spend $300,000 on healthcare during their retirement. And have you ever heard you can withdrawal up to 15 percent of your nest egg each year? The safer bet is to follow the four percent rule, which allows you to take out four percent out of your accounts in the first year of retirement and then gradually increase withdrawals each year based on inflation.
Do not fall for one of the biggest misconceptions. According to a fidelity study, more than half of the respondents believe they will need five times their final salary to retire. The real number is more like 10 to 12 times your final salary invested before leaving the workplace.
So do not wait to make a plan. To build a $1,000,000 nest egg by age 65, you would only need to save $381 a month starting at age 25.