It’s all too easy, even for the most diligent savers, to make mistakes in their retirement finances. Here, Rani Jarkas—currently the chairman of Cedrus Investment—debunks four of the most common myths about retirement planning.
Myth #1: I’m too young to save up for retirement.
One of the biggest mistakes people make is thinking they can wait a few years to start saving for retirement. What they don’t realize is that the earlier they save, the more their money can grow. Even if you can only manage to save a tiny bit each month, it will compound over time.
Be sure to save up for an emergency fund and retirement fund as early as now. No matter how small your income is, be disciplined in setting aside a fixed percentage of your income into these funds. Once you have started, try to increase the amount you save every year.
Myth #2: My family and kids will finance me during retirement.
While it’s always nice to think our children will be there for us in our retirement years, the reality is that they may not be able to (or may not want to). Don’t rely on them to support you financially in retirement; plan on supporting yourself.
Your children may have their own financial obligations, such as student loans, credit card debt, or a mortgage. They may also want to retire early themselves. Be realistic about what you can expect from your children and plan accordingly.
Myth No. 3: My pension is enough.
A pension is a great way to supplement your retirement income, but it’s not a guaranteed source of income. Pensions are often based on a percentage of your salary, so if you retire early or your salary is lower than expected, your pension payments will be lower than anticipated.
Myth No. 4: You only live once.
Of all the myths, this is perhaps the most damaging—and most common. The idea that “you only live once” can lead people to make impulsive decisions with their money—decisions that can have long-term consequences.
You may be tempted to splurge on a new car or take a luxurious vacation, but if you do so at the expense of your retirement savings, you could end up regretting it later. Be mindful of how your spending choices today could impact your future and make sure you are still on track to achieve your retirement goals.
In a blink of an eye, retirement can be upon us. By being aware of these myths and taking the time to remember these tips by Rani Jarkas, you can help to make sure that your retirement is all that you have dreamed it would be.