Retirement: 7 Investment Myths

When it comes to retirement, you often hear how most people won’t have the money they need to live the life they want, right? If you’re approaching retirement age and are facing that possibility, you have a right to be alarmed. It’s concerning even for Gen Xers and millennials.

Some of the information out there can steer you the wrong way, causing you to have a smaller nest egg in your golden years. This may mean postponing your retirement date.

The idea is to be able to sort out the truth from the misconceptions, enlisting the help of a financial advisor, if necessary, to find the strategy that’s best for you. Here are some things to consider:

1. Don’t start investing until you have “enough.” A big misconception about investing is that you have to have a significant amount of cash before you can make any real money. However, this is the long game, folks—over time, even small investments can yield a substantial return. Make it easier on yourself by establishing an affordable amount from your monthly budget and automating your deposits.




2. Once you get to retirement, you’re done moving your money around. Many people see retirement as a finish line—when you stop investing and only save. Instead of the end of your investment strategy, it’s simply time to amend it. Make an appointment with your financial advisor to discuss things like estate planning, cash flow management and tax efficiency.




3. As you get older, bonds are the investment of choice. This adage has long time past. Today, the interest rates on bonds are low. And they may be worth even less in the future if interest rates rise significantly. To reach your retirement goals, consider investing in more stocks.

4. The distribution phase doesn’t take much thought. You’ll get no argument from most people that saving enough money for retirement is the hard part. Distribution should be a cinch! Don’t take your eye off the ball now though—distribution planning is key to not running out of money. Minimize this risk by ensuring you have stable income throughout your retirement years.




5. A good marker is to save 10–15% of your income. Maybe if you started in your 20s! We love what compound interest does to account balances over time. But if you start later in life, then you’ll have to up that percentage to catch up. Try to hit 20%.




6. Your retirement savings should all be in 401(k)s and IRAs. Although this is a great strategy if you retire at age 59.5 or later, if you retire earlier, it could be a problem. A better plan is to have some additional funds saved and invested in non-retirement, taxable accounts so you have access to some money if you’re considering an early retirement.




7. All financial advisors are bound by law to act in your best interest. Not true. Before you hire an advisor, ask if they are a fiduciary. Anyone holding this title is legally bound to act in your best interests. Don’t let a relationship with an unscrupulous “expert” deplete your retirement savings.

Retirement is something we should all be saving toward, no matter our age. People are living longer and the chance of having a long retirement are increasing. Make yours what you want—all it takes is some planning and sound guidance for your second act to be full of time (and money!) worth spending.