TV commercials selling retirement planning services follow a consistent theme. They encourage you to think of retirement as a sort of well-deserved vacation. It’s a time to watch the sunset from your rocking chair, a time to play golf all day long, or a time to stand on the deck of a sailboat and stare at the horizon.
But it’s essential to shape your own Utopian ideals about what retirement could be for you. To design a retirement plan that will make you truly happy, here are three common assumptions that you should avoid making:
Common Assumption #1: Your Family Can Handle Your Funeral Expenses.
Funeral insurance, also referred to as burial insurance or final insurance, is a way to make sure that your family has the money needed to take care of your funeral arrangements. PolicyZip suggest that you should look into this specialized type of insurance to avoid burdening your family or beneficiaries with the cost of your funeral and other final expenses.
Common Assumption #2: You Have to Be More Conservative About Your Investments
When you speak to your financial advisor about your investments, don’t be surprised if they urge you to be cautious about it. They are not being conservative about the market nor about your ability to invest wisely. Instead, they are coming from the perspective that you might not live long enough to benefit from more aggressive investment strategies.
Your financial advisor, for instance, may suggest that you change your strategy and get a more evenly balanced collection of fixed income investments and stocks, suggesting that you invest no more than 40 percent in equities.
Although they may not openly tell you that you might not live long enough to ride out many inevitable market lows, if you find yourself on the receiving end of this type of advice—ignore it.
It’s dated advice.
Modern improvements in living conditions, sanitation, and medicine has increased longevity, making it possible for all of us to live longer, productive lives.
You may, in fact, be better off continuing with your current balance of diversified investments. So, if you’re in your 60s, plan to invest for another 20 years. This is plenty of time to benefit from long-term investments. You don’t want to miss out on any future bull markets that could increase your financial security.
Common Assumption #3: You’ll Have to Stop Working During Retirement
Many people who have jobs they hate envision retirement as a time to escape the rat race—a way to finally break free from long-commutes, office politics, tedious work, and dysfunctional managers. But what if you’re a retiree who loved your work because it gave you a sense of identity and imbued your life with a sense of purpose and meaning?
Many people find work highly rewarding. Warren Buffett, for example, doesn’t need to work, but he can’t imagine doing anything else that’s as much fun.
So, if you’re an A-type personality, a race horse who loves to win, then being put to pasture might not feel like freedom. If you happen to be one of those people who love their work, then by all means continue to work. And if you’re working too many hours now, you could cut down on your hours, try a less demanding role, or try something new, but you don’t have to stop working completely.
Naturally, you shouldn’t see continuing to work as obviating the need to create a retirement nest egg. You’ll still need a financial plan for retirement in case your health falters or you do decide you want to spend more time traveling and visiting the grandkids.
In conclusion, when planning for retirement, dare to think outside the box. Most people assume that their children or beneficiaries can handle their final expenses, that they should go easy on their financial strategies, or that they should resign themselves to boring routines just to keep themselves busy during retirement. None of these assumptions may be true for you.