A Few Realities Would Be Retirees Should Keep In Mind

Retirement is a concept that is more difficult to prepare for than the average person might realize. Many people view it simply as a time to stop working and begin to collect Social Security while putting little more thought into the subject. However, there are some major realities that people need to keep in mind such as the following:

• A common assumption is that spending goes down with age. However, there is little evidence to support that generalization with many retirees see cost of living go up due to factors ranging from extra free time to higher medical bills.
• Social Security alone is not enough for most people to exclusively rely on during retirement. Monthly benefits only replace, on average, %40 of a persons income which leaves a gap that must filled through advanced planning or, sadly, continue to work to supplement benefits.
• While Social Security income is tax free for many, that is far from the case for everyone. Depending on a recipients income, up to %85 of benefits may be taxed. In addition, other sources of income such as pensions or 401(k)’s may also be taxed so always plan for that fact when budgeting.

See, Don’t Fall for These 3 Retirement Myths, The Motley Fool, May 8, 2016.