Myths about retirement and why you need to start saving now

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The Year of Profit podcast, hosted by Joe Shortridge, is your go-to resource for transforming every aspect of your life. As a seasoned life and financial coach, Joe brings a unique blend of personal development and financial wisdom to each episode. This podcast is designed for anyone looking to improve their mindset, boost productivity, manage stress, and achieve financial success. Whether you're striving to overcome personal challenges, build better habits, or enhance your financial literacy, The Year of Profit offers actionable strategies to help you reach your goals.

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Show Transcript

 Don't rely on Social Security as your sole source of income in retirement—it won't be enough.

    Investing only up to the match on a 401(k) isn't enough for retirement. Set yourself up for success by putting away 15% of your income each year.

    Many people plan on working through retirement, but only a small percentage actually do.

    Medicare doesn't cover all health expenses—especially deductibles, copays or any long-term care.

    It's never too late to start saving for retirement, and you should do it with the help of an investment pro to give you confidence that you’re heading in the right direction.

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Listen, we all want to build wealth and have the retirement of our dreams. But it’s not going to happen if we’re getting sidetracked by all the naysayers and the misinformation swirling around.

Get expert money advice to reach your money goals faster!

There are myths about retirement everywhere. Maybe your angry broke uncle thinks “the little man can’t get ahead” or your buddy shared some sketchy financial “advice” on social media (stick to funny dance videos, TikTok). No matter where they come from, those myths and lies could keep you from taking the steps you need to take to secure your retirement future.

 

So, get ready, because today we’re going to bust the top six retirement myths so you can start building the retirement of your dreams—right now.

Myth #1: I’ll Live Off Social Security Income

This is a common one . . . but relying on the government to take care of you in retirement is dumb with a capital D. Here’s the reality: Living off Social Security will only lead to social insecurity.

The problem is, there’s a huge gap between what future retirees think they’re going to receive from Social Security and what they’re actually going to get.

Right now, retirees receive an average monthly income of $1,918 from Social Security.1 That’s about $23,000 per year. That’s barely enough to keep the lights on and put food on the table, let alone actually enjoy a comfortable retirement! And yet, a recent poll found that nearly 1 out of 5 Americans (17%) don’t expect to have any source of retirement income beyond Social Security.2 Yikes.

And the news gets worse for those who aren’t retiring for a while, because the latest projections show that Social Security benefits will be slashed by more than 20% in 2033 unless Congress takes action.3

 

Do you really want the quality of your life to be dependent on how the Senate votes? If you want to travel the world, start that business, or pursue your dreams in retirement, this is your wake-up call. Social Security just isn’t going to cut it. It’s time to take matters into your own hands and start taking steps to secure your retirement future—today.

Your retirement is your job—not the government’s.

Myth #2: If I Invest Up to My 401(k) Match, I’ll Have Enough to Retire

First of all, if your company offers you a match on your 401(k), take that match! It’s a fantastic place to start investing. But stopping at the 401(k) match is like running a marathon and stopping a quarter of the way into the race. We hate to break it to you, but you don’t get a medal for stopping at mile seven!

If you really want to build a solid nest egg, you need to invest 15% of your income into retirement. And that means you have to invest beyond the match.

Sound scary? Not if you’ve built a solid foundation for your finances first! When it comes to wealth building, we believe in the Baby Steps. And investing for retirement doesn’t happen until Baby Step 4.

So, what are the first three steps? Before you start investing, you need to pay off all your debts (except your mortgage) and save up an emergency fund of 3–6 months of expenses. That frees up your most important wealth-building tool—your income. With no debt and a full emergency fund, you’ll have room in your budget to invest 15% of your income for retirement!

 

Once you’re ready, here’s what we recommend:

    If you have a traditional 401(k): Contribute up to your employer’s match in your 401(k), then work with a pro to invest the rest in a Roth IRA. If you max out your Roth IRA and still haven’t hit 15% of your income, go back to your 401(k).

    If you have a Roth 401(k): You’re in luck! As long as you have good mutual fund investment options, you can invest your full 15% in your workplace account.

There’s a whole group of folks out there called Baby Steps Millionaires who have worked and saved their way to millionaire status using this strategy. They consistently invested 15% of their income into their 401(k)s and IRAs month after month, year after year . . . until one day they looked up and realized they had a million-dollar net worth! 

Myth #3: I’ll Work Through Retirement

Whether it’s those crushing health care costs, higher-than-expected living expenses, or simply because they can’t afford to retire, 75% of workers say they plan to work during their retirement years. And yet, just 30% of retirees actually end up working.4 Do you want to bet your future on those odds? Probably not.

If you do work in retirement, it should be because you want to—not because you have to. So between now and then, you have to do all you can to set yourself up for a comfortable retirement without needing a job to pay the bills. If you’re struggling to take those steps, maybe it’s time to figure out why.

You can start by learning how to control the way you behave with money. Check out Rachel Cruze’s book Know Yourself, Know Your Money, so you can learn more about why you handle money the way you do and what you can do about it now.

Myth #4: Medicare Will Cover My Medical Expenses

There’s a lot of confusion about Medicare (the government-provided health insurance program for folks age 65 or older) and what it can and can’t do. So, let’s clear the air here. 

Medicare can give you affordable health insurance coverage for doctor visits, medication and hospitalization once you blow the candles out on your 65th birthday cake. That’s the good news.

However, Medicare doesn’t cover the cost of deductibles, copays or any long-term care, like the care you’d receive in a nursing home or assisted living facility that lasts more than 100 days. Those costs are on you. That’s the bad news.

This is really important because the biggest health expense in retirement is long-term care. Here are some numbers to keep in mind:

    The median annual cost for care at an assisted living facility is $64,200, and a private room at a nursing home costs about twice as much ($116,800).5

    Someone turning 65 years old today has almost a 70% chance of needing long-term care of some kind.6

    In extreme cases, some couples could need up to $413,000 for health care expenses in retirement—even if they have Medicare.7

Listen, just like good ol’ Social Security, the future of Medicare is also pretty murky if you’re not retiring in the next few years. That’s because Congress might have to raise the eligibility age, increase premiums, or reduce coverage in order to cut costs and keep Medicare benefits going for future retirees.

That means that regardless of Medicare, you need a plan to cover all these health costs in your golden years! Here’s how to safeguard your retirement from medical expenses:

    Step 1: Get long-term care insurance the day you turn 60. It’s not a fun birthday gift, but you’ll reap the rewards if you or your spouse ever need this service.

    Step 2: Kick your retirement savings into high gear. The sooner you realize you can’t rely on Medicare, the more time you have to ramp up your savings.

    Step 3: Do you have an insurance policy with a Health Savings Account (HSA)? If you do, your HSA (think of it as a “Health IRA”) could help you fill the gap and pay for medical expenses that Medicare can’t pay for. Not only does the money you invest in an HSA grow tax-free, but you can also take out money in retirement to pay for medical expenses without paying any taxes on it. That’s a win-win!

Myth #5: It’s Too Late for Me to Save for Retirement

If you feel scared about your retirement future, here’s the truth: No matter how close you are to retiring, there’s still time to grow your retirement savings

Let’s say you turn 40 this year and bring home around $4,000 a month. By investing 15% of your income until you retire, you could end up with a nest egg worth close to $1.2 million.

Well, that’s great if you’re 40. But what if you’re 50? Contribute 25% of your income toward retirement until you’re 67 and you could have $592,000. Is that better than zero? You bet it is!

No matter how old you are or how much you’ve saved so far, you can still do something. Don’t waste another minute by counting on the government to take care of you in your later years! Remember: The more time your money has to grow, the more compound growth can work in your favor.

Myth #6: I Can Do It on My Own

When it comes to investing, it can be tempting to fly solo and guess your way through it. But there’s a reason why every flight you’ve ever been on has a pilot and ­a copilot in the cockpit. When you’re on your own and you don’t know what you’re doing, you might crash and burn or end up way off course from where you want to be. (Nobody wants that.)

Working with an investment professional will give you confidence that you’re heading in the right direction and help you focus on the long-term game. And it’s more than just confidence. It’s building a quality team around you to help you make the right moves.