6 Common Retirement Misconceptions

6 Common Retirement Misconceptions

Planning for major life events can be very exciting, but it can also be very stressful. These types of events should require some deep thought and a thorough planning process. Some people enjoy the planning process and take the time to do so, while others do not spend as much time preparing. It is important to plan properly in order to be successful. Today, we want to discuss the importance of retirement planning, and how to avoid the common misconceptions many people make while planning for retirement.

Misconceptions are common in every area of life, and especially when it comes to retirement. Your golden years should be the best years of your life, so we want to clear the air and make sure you understand the next phase of your life. People tend to assume things when it comes to different areas of life. It’s a part of life, and it will always be a part of how people think. However, assumptions and misconceptions can be damaging if you make them towards important decisions in your life before fully understanding each position. 

Many individuals believe that all or most of their savings should be in qualified plans. What exactly is a qualified plan? Simply put, a qualified plan is one where your contributions are not taxed until you withdraw money from the plan. These can be very appealing because they allow your money to grow on a tax-deferred basis. Examples of qualified accounts include traditional IRAs, 401(k)s and other defined benefit plans. These are commonly the largest nest egg that pre-retirees build as they are working. This makes sense because most of the time, you are taking a portion out of each paycheck and putting it towards a retirement account and, hopefully, you are receiving a company match. So naturally, many people believe that all or most of their retirement savings should belong in a qualified plan. We are here to explain why this is not necessarily the case.