An Overview:
Over the past few decades, the concept of retirement has acquired a folklore all its own. One can liken it to a number of urban legends - those tales that become taller each time they are told. As people dream of their own retirement, they often perpetuate the myths and misconceptions they've heard by passing them on to their family, friends and business colleagues.

Whether you are planning to retire in five years or are just beginning your career, you should be aware of the following are ten myths. I will present the myths in three parts over the next three months.

Ten Retirement Myths

1. Retirees need 75% of their pre-retirement income to live comfortably in retirement
2. Retirement income will come equally from Social Security, personal savings, and pensions.
3. Retirees should emphasize fixed income assets, such as CDs and bonds.
4. All retirees stop working when they retire.
5. Retirees should only plan to support themselves when they retire.
6. Retirees should give away their assets so their heirs can avoid estate taxes.
7. Medical expenses and nursing home costs will be taken care of by Medicare.
8. Family inheritance is a reliable source of retirement income.
9. There's a point where it's too late to ever catch up.
10. Saving for retirement doesn't need to be a top priority for those starting a career.

Dispelling the Myth:

• Retirees do not automatically stop working as they did in the past - many are choosing to reinvent themselves and explore new avenues, even if it's not a full-fledged career.
• For those retirees who do stop working altogether, according to statistics, one third of them go back to work within one year of retiring and two-thirds of them take full time jobs.6
• Many retirees continue to reinvest at least part of their retirement income.
• Retirees are now more likely to reenter the workforce because of legislation allowing those 65-69 to still earn income without penalizing their Social Security benefits.
• For many retirees, a job is an integral part of their identity and a source of meaningful activity. They may find it harder to leave than they thought.
• As the primary work of tomorrow is knowledge work, which requires little or no manual strength, many retirees will be able to participate. A unique strength that retirees provide is wisdom, which can be a great advantage in the workplace.
• There may be a medical advantage for retirees to continue to work. Research demonstrates clearly that maintaining mental activity can sustain a sharp mind far into old age, barring illness.7

The Bottom Line
Even if a retiree decides to stop working initially, he/she may find himself/herself re-entering the work force for a number of reasons, including the need to earn extra money, boredom, social aspects, or the desire to learn something new.


Dispelling the Myth:

• Even if a retiree only supports himself/herself and perhaps a spouse, they are likely to have to do so for many years to come and must factor in items such as increased medical expenses and care.
• Consider that many Boomers are part of the so-called Sandwich Generation, which means they may be paying tuition bills for their children, while also providing financial support for their aging parents.
• Nearly 90% of Baby Boomers say taking care of their parents is among their top three life priorities - they want to be able to help any way they can.8
• Collectively, family caregivers spend $2 billion of their own assets each month to assist their relatives in some way.9
• There are often times when grown children need financial assistance of some kind, and most parents like to be in a position to help them - retired or not.
• Many individuals have a strong desire to help pay for all or part of their grandchildren's college education.
• Retirees should remember that birthdays and other gift-oriented holidays and celebrations continue to take place during retirement.

The Bottom Line
Before retiring, individuals should take a hard look at the savings they've accumulated to make sure it's really going to be enough for them to live comfortably despite other potential financial obligations.


Dispelling the Myth:

• Today, individuals may live 30 or more years in retirement and they may need to sell some of those assets along the way to help pay for things like medical care, etc.
• Some predict that most retirees will need to continue saving money until they're about 80, given today's long life expectancies, so it may not make sense to begin giving assets away.
• It is better for retirees to be conservative with gifting rather than impoverish themselves to avoid estate taxes.
• Some individuals may wish to consider making gifts of non-income producing assets, such as paintings or jewelry.
• If one chooses to do so, he/she can annually give, tax-free, up to $10,000 (or $20,000 if married) to as many individuals as he/she wants.
• In some instances, credit shelter trusts can help married people shelter twice as much as the tax-free limit.
• Charitable remainder trusts can remove assets from an estate while allowing the owner to continue benefiting from them.

The Bottom Line
Proper estate planning is vital and must be done on an individual basis, specifically tailored to each unique situation.

6. 'Busting Retirement Myths,' Blue Ridge Business Network
7. www.blueridgebiznet.com
8. The End of Retirement is Near,' The Futurist, www.futurist.com
9. 'Fourteen Forecasts for an Aging Society,' The Futurist, November-December 2000, www.futurist.com

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