It’s a concept that doesn’t even cross our minds as we start our careers, but as time progresses, retirement comes a big topic for us. It would be fair to say that this is something which is being made more prominent in the media as well. This might be in relation to the retirement age which seemingly keeps increasing, or the noise about pensions which always seems to grab the headlines.
Ultimately, there will become a time where you really start to think about retirement and potentially finishing work years earlier than the official age stipulates. Unfortunately, doing this is easier said than done, and through today’s article, we will now take a look at some of the key early retirement myths that tend to do the rounds.
“You won’t need as much money when you retire as your expense will be lower.”
This is one of the most common myths out there, but unfortunately, it’s just not true. As much as some experts like to suggest when you finish working the expenses don’t end at the same time. On the contrary, they start to grow. Sure, you might have paid off your house mortgage and a whole host of other large expense which have plagued you for years.
In their place, you have others. Some of these can be long-term, such as the cost of caring for either yourself or your family as you get older, or even the costs of paying for your funeral. Then, when you factor in the point about having more disposable time to spend your money, it becomes much easier to see just how your expenses can really take a hit as you enter elderly age.
“You need to put all your money into a savings account.”
In some ways, this piece of advice is admirable. After all, your money is always going to be better in a savings account rather than being splurged on needless items. However, if you are serious about retiring early, you need to think bigger than saving. Sure, it’s a start, but you will always lose out to the power of inflation. In effect, you will be losing money.
So, what can you do? This is where investments come into the picture. They’re not for everyone, but if you can ride the storm and accept that they are long-term solutions, then you will tend to benefit and watch your retirement nest egg grow.
“The government will take care of your retirement.”
Let’s end with another dangerous myth. While you will contribute a regular pension, this doesn’t automatically mean that the government are going to look after you regardless.
Firstly, this is only going to happen if you retirement at their suggested age – and this is always increasing. Then, let’s not forget that the goalposts are constantly changing, and there’s no guarantee how pensions are going to turn out in the future.
In short, unless you have contributed generously or are part of a fantastic pension scheme, it’s best to rely on other means to support your early retirement.