There are a large number of people who plan for their retirement throughout their working career, while others simply improvise, with the hope that a golden parachute will fall into their laps. While each option may be one you are considering, there are a number of realities and myths surrounding retirement that you should be aware of in order to properly plan, financially speaking, for this time in your life.
One of the biggest realities that many do not realize is that even when you have a 401 (k), as well as other benefits such as Social Security and Medicare, most people will still have to save a large amount of their income for their retirement years. Some of the most common mistakes that should be avoided when planning for retirement are highlighted here.
One of the most important aspects that you need to consider when planning for retirement is that saving is a must. You need to have a safety net, in order to account for the fact that you will have much less money coming in for paying your bills. Putting your money into the stock market is not going to be the safest option for your money; however, options such as money market accounts, certificates of deposit and treasure bills may be a safer decision. The bottom line is that you need to begin saving for retirement at a relatively early point in your life.
Making the Assumption that Medicare will Take Care of Your Medical Expenses
While Medicare will cover health care expenses when a person reaches the age of 65, it does have its limitations. It will not cover any sickness that hits while outside of the United States. It may also not cover things such as dental or eye care that were taken care of by your employer provided insurance plan.
Not Planning for Taxes
There are certain types of retirement plans, such as the IRA that will have a minimum distribution requirement. This may lead to an increase in the taxes that you have to pay.
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