There are all sorts of myths attached to almost every aspect of personal finance, from investing to your credit score. Retirement is another common area filled with money myths. If you’re not careful, this kind of misinformation could cost you a comfortable retirement.
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Money expert Dave Ramsey debunked some of the most popular retirement myths on his website Ramsey Solutions. It's time to stop believing these six retirement myths.
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You will live solely on social security
According to the Ramsey Solutions post, retirees receive an average monthly income of $1,657 from Social Security. If retirees relied on this income alone, they would only receive $19,900 per year — and that amount may not be enough for a comfortable retirement.
While it is true that retirees receive Social Security benefits when they retire, these benefits are not meant to fund your entire retirement lifestyle. It is up to you to start building a robust retirement portfolio today.
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You'll have enough money to retire if you invest up to your 401(k) match
Maxing out your workplace 401(k) is a great way to start investing for retirement. However, you shouldn’t stop investing just because you’ve reached your match.
The post on Ramsey Solutions recommends investing 15% of your income into retirement. You can do this in a few different ways, depending on whether you have a traditional 401(k) or Roth 401(k).
Ramsey Solutions advises people with a traditional 401(k) to contribute up to their employer's amount to their 401(k) and work with a professional to invest the rest in a Roth IRA.
If you have a Roth 401(k), we recommend investing the full 15% in your retirement account at work.
You will continue working until your retirement
This myth comes with a disclaimer from Ramsey Solutions. Retirees who work in retirement do so because they want to work. If they don’t want to and have financially prepared themselves for a comfortable retirement, they don’t have to.
Medicare covers all your medical expenses
One of the biggest expenses during retirement is health care. Although retirees are eligible for Medicare once they turn 65, it is not designed to cover all of your health care costs.
According to the Ramsey Solutions release, retirees will be required to pay their own deductibles, co-payments and any long-term care costs.
To secure your retirement and combat unexpected healthcare costs, Ramsey Solutions recommends retirees purchase long-term care insurance once they turn 60.
Retirees should also boost their retirement savings and invest money in a Health Savings Account (HSA) to help pay for any medical expenses that may arise.
It's too late to save for retirement
Who says that? There is always time to save for your retirement and grow your retirement savings.
If you have a shorter investment horizon, Ramsey Solutions recommends investing 25% of your income each year until you reach age 67.
You can financially guess your way to retirement
It’s a pretty big myth to think that you can financially plan your way to retirement on your own. Instead of trying to financially plan your retirement, Ramsey recommends working with an investment professional.
Why work with a professional? An investment professional can walk you through your retirement financial plan and determine if you’re on track. If you need to make adjustments to get back on track, they can tell you what changes to make based on their expertise — not your guesses.
Plus, by working with a professional, you can ask any questions you have about your retirement, get the answers you need, and plan with confidence for the next chapter in your life.
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This article originally appeared on GOBankingRates.com: Dave Ramsey: 6 Biggest Retirement Myths You Shouldn't Believe
