Five Myths of Retirement Planning

Today Jag and Amy delve into five common myths surrounding retirement planning. Amy, leveraging her 20+ years of experience as a financial advisor, deconstructs each myth, providing insights grounded in real client interactions.

First, they address the myth "I'll spend less in retirement," discussing how retirement often brings new expenses, such as travel, hobbies, and healthcare, which may not decrease spending as expected. While fixed costs like mortgages might end, discretionary spending and healthcare needs can actually rise.

The second myth is the belief that being debt-free in retirement equates to reduced expenditures. Amy explains that having low-interest debts like mortgages during retirement isn't necessarily bad if the returns on investments exceed the interest rates, emphasizing the importance of financial planning over simply clearing all debts.

The conversation then shifts to the effectiveness of employer-sponsored retirement plans like 401(k)s and 403(b)s. Amy argues that merely saving the maximum in these plans may not suffice for a comfortable retirement due to factors such as investment choices, duration of savings, and the timing of retirement, highlighting the complexity of retirement planning.

The fourth myth tackled is the idea of downsizing homes in retirement. While some may intend to downsize, Amy points out that emotional attachments and the physical demands of moving often keep people in their current homes longer than planned, complicating the downsizing process.

Lastly, they debunk the myth that taxes will be lower in retirement, with Amy warning that retirement income can trigger higher taxes and health insurance costs under Medicare's IRMAA surcharges. She stresses the importance of strategic financial planning to manage these potential increases effectively. Jag asks about the possibility of tax increases in the coming years.

Throughout the podcast, Amy and Jag emphasize that effective retirement planning requires a holistic approach, considering not only savings but also spending strategies, tax implications, and personal circumstances to ensure financial stability and fulfillment in retirement. They conclude by reminding listeners to consider retirement as a phase requiring its own unique set of strategies and preparations

To get in touch with Amy and her team at Thimbleberry Financial, call 503-610-6510 or visit thimbleberryfinancial.com.