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Carla Fried: Don't believe these 5 retirement myths

Carla Fried, Rate.com on

Published in Business News

Our less-than-ideal retirement system requires most retirees to make a series of decisions in their 60s that could determine their financial and healthcare future. But widely held beliefs around retirement and old age — many of them mistaken — can lead to ruinous decisions.

Be on high alert for these five myths:

1. You won’t live past 85.

If you land at age 65 in average health, odds are pretty good you will still be around at 85: a 55% chance for a woman, 44% chance for a man.

More than 30% of 65-year-old women in average health today will be alive at 90, and nearly one in four men. Believing the myth of an early demise and reduced life expectancy can cause you to make poor decisions around how to save and when to claim your Social Security benefit.

Especially for couples. The odds that one member of a 65-year-old hetero couple will be alive at 90 is 49%. For a same-sex male couples, the odds that one partner will be alive at 90 is 40%. For same-sex female couples, the odds that one will be alive at 90 is 56%.

 

So, the highest earner in a household should wait until age 70 to claim Social Security. That patience means if someone lives into their 90s, they will have the highest possible Social Security benefit.

2. When you retire, you should shift to conservative investments.

Actually, playing it too safe can backfire given the long-term punch of inflation.

If you are relying on your personal investments (not a pension and not Social Security) to cover some of your living costs, you’re going to be a lot less stressed if your portfolio keeps up with the rate of inflation.

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