13 Retirement Myths Debunked By Money Magazine

According to Money, there are 13 big myths about retirement that you need to be aware of—and the sooner you know about them, the sooner you can make any necessary adjustments to improve your preparations for those twilight years.

Myth 1: You need a big income to have a big nest egg
Myth 2: You can’t get rich with a 401(k)
Myth 3: Everyone has debt
Myth 4: A million dollars will cover you

Myth 5: Boomers will crash the market
Myth 6: Without a pension, you’re doomed
Myth 7: Social security won’t be there
Myth 8: Your house can finance retirement
Myth 9: You’re too old to start saving
Myth 10: Short-term market swings don’t matter
Myth 11: Top priority is the kids’ college
Myth 12: Decent savings plan = early retirement
Myth 13: You’re bound to mess up your 401(k)

We think debunking these myths is a great service, but it’s not really applicable to our own plan for retirement, which is to commit a terrible crime around age 70 so that we can wrap up our final years with free room and board in the big house. Hey, it might not be a fancy way to fizzle out, but it’ll be cheap—and nobody’s going to shiv a 70-year-old man. (We hope.)

“13 retirement myths” [CNNMoney]
(Photo: Getty)


Edit Your Comment

  1. louisb3 says:

    “Nobody’s going to shiv a 70-year-old man.”

    As long as your crime isn’t too terrible, sure.

  2. CumaeanSibyl says:

    I suggest you take as your guide Charles Bronson in Death Wish IV. He was pushing 70 by then, or maybe he just looked like it.

  3. moorie679 says:

    Just start smoking, eat a lot of ribs and quit running on treadmills and you wont have to worry about retirement or that nest egg. You will be lying in a coffin comfortably. This is how you beat the system

  4. CyGuy says:

    One caveat that would be helpful in the Consumerist write-up is that this is advice to people making six-figure incomes currently. As my family of four currently gets by on about $50k/year, that would give me $50k+ to sock away for retirement, for which I don’t think I need to many insider secrets to get to $1.5M before retirement.

  5. sonichghog says:

    This guy saved for 13 years.

    10 of those were at the 15k max. After that he only has 200k. Something is not quite right.

  6. S-the-K says:

    IMHO, it is a myth that there is a myth that Social Security will be there. I nearly blew my stack when their “fix” for Social Security is to increase taxes and increase the employer’s cost to employ an employee.

    IMHO, the way to fix Social Security is to tell everyone under 30 years old, “no Social Secuirty for you. Get an IRA!” Then tell everyone from 30 to some number that they have an option to put some or all of their Social Security taxes into an IRA and have a reduced pay-out from Social Security. And everyone who is close to retiring and getting their pay-out are kept in the old system and get their benefits. I’m sure that even those who opt-out of Social Security will have to pay something to pay for those who opt-in the system, but eventually nobody will be left in the old decrepit system and the Social Security taxes will end.

    Every payday I look at the taxes that are taken out of my paycheck and imagine if I could put my portion of the Social Security taxes into my IRA or my 457 plan or my Defined Contribution pension plan — letting my employer’s portion (the taxes that don’t show up on my pay stub) go to pay for current and soon-to-be retirees. I *know* I would get a higher rate of return than I would from Social Security.

    Surely, if people — even those who only paid half-attention in government school — knew the truth of the poor return on their money from Social Security vs. (for example) Vanguard Total Market fund or Vanguard 500 fund or Vanguard Wellington fund, they would surely opt for the higher return of private accounts.

    Unfortunately, government schools don’t teach finance or economics properly.

  7. kimsama says:

    @sonichghog: I don’t think it says that 10 years were at the 15k max, it just says he’s been saving 15% for 13 years and eventually reached the max at this contribution level. Because otherwise, sadness.

    @Cy Guy: I’m pretty sure that this advice works for people who don’t make six-figures, too (I sure don’t! But I found that I’m following much of the advice and things look rosy). Or did you mean “not making six-figure incomes currently”? I’m all confused. ^_^

  8. burgundyyears says:

    I would gladly sign a contract waiving any claims to SS in perpetuity if I could get my contributions to it back.

  9. wezelboy says:

    @burgundyyears: I’d do that even if I had to write off my contributions up to this point but never had to contribute again. And I’m pushing 40.

  10. sabrinad says:

    @S-the-K: I’ll take your “No Social Security for you! Get an IRA!” if you’ll give me my money back first. If I’m expected to financially support my boomer mother through her retirement (and trust me when I say that that expense actually does play a part in my own retirement planning), I’d just as soon write the checks myself than have the federal government do it by proxy.

    Honestly, I have always expected Social Security to never give me any money — and I really love my annual statements from them that tell me that I’ve paid in enough to be eligible for full benefits, assuming there’s anything left for me, which even they say there probably won’t be — but it’s a bit galling when other folks celebrate my having flushed thousands of dollars down the toilet. At least the boomers could say “thanks, kids!”

    Now, back to my regularly scheduled grumpily waiting for the housing market to correct itself.

  11. @wezelboy: become a public school teacher in Illinois. You’re forbidden from taking SS even for the years of FICA-eligible work you did before you became a teacher. You make no FICA contributions. Instead, you contribute to the state teachers’ retirement system and you get a pension when you retire. If Blagojevich hasn’t eaten them all by then.

    It sucks balls.

  12. Myron says:

    @S-the-K: Social Security is a pay as you go system, so the SS taxes you pay now are used to provide SS benefits now, not in the future. If you stop paying those taxes now there will be that much less benefits for those already retired. How does your plan address current retires?

  13. sonichghog says:

    @kimsama: I just guesstamated at the number. It said he saved his money, and in 1997 he was contributing the max. That was in 1997 The story is now, so 1997-2007 = 10 years. Or 10 years at the max.

  14. sonichghog says:

    @burgundyyears: I would go one further. Im 35 now, I would GLADLY, give up everything I paid into SS and not get a cent of it.If from now on I could put my new SS payments into my own fund starting now.

  15. kimsama says:

    @sonichghog: Oh, ok! I see what you mean. I think it just gave the max possible in 2007 ($15,500), though (I didn’t see anything about 1997 in there, but I admit to skimming these things). ^_^

  16. JiminyChristmas says:

    I think some of you people misunderstand what Social Security is: it is not a retirement plan, it is insurance. In addition to guaranteeing some level of retirement income it also provides income if you become disabled (SSI), and it covers the proverbial widows and orphans, aka survivor benefits.

    Imagine yourself a diligent saver, there’s no SS, but you have a decent 401(k) balance. Suppose that in the two years before your planned retirement date your 401(k) loses about 30% of its value. Sound implausible? Ask my co-worker who planned to retire in 2003 who is still working. And if he weren’t able to work? And there was no SS? I guess he would be eating cat food for the duration.