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Retirement Myths Busted

Retirement Myths Busted

Myth: People need to replace 100% of their pre-retirement income once they retire, meaning they need a check equal to their salary check in retirement.
Truth: Most people only need 70-85% of their pre-retirement income to live comfortably, but this all depends on what you plan to do in retirement.

Myth: There are enough resources to help people meet their retirement needs.
Truth: About 45% of people are on target to MISS their retirement needs.

Myth: We’ve still got social security and it covers nearly 42% of our pre-retirement needs.
Truth: IF social security sticks around, the expected replacement rate for pre-retirement funds is a little less than 30%. There’s a gap and people need to be prepared.

Myth: 401(k)s have become the new bread winners in retirement accounts.
Truth: Not! As of 2004 (and the numbers probably haven’t increased much), the average head of household heading into retirement only had about $60,000 saved in their 401(k)s. Assuming 12 ½ years in retirement, that’s roughly $400 a month. People are also living longer these days, so retirement may be longer than 12 ½ years.

It is important to know the facts when it comes to planning for your retirement. If you’re not sure, get with a retirement planner and hash it out. It’s better to know what lies ahead so that you can prepare for it rather than cross your fingers and hope you make it.

What are some retirement myths you’ve heard or believe(d)? How will you use these tips to help you plan better? [MSNBC]

Posted: 8/5/08