3 Financial Myths That Keep Boomers From Retiring on Time
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A Pew Research study conducted in December 2023 found that the number of working Americans ages 65 and older had nearly doubled in 35 years. There are many good reasons for a healthy adult to keep working, including social interaction and the opportunity to learn new skills.Still, it's safe to assume that most seniors remain on the job for financial reasons. There is no denying that managing a budget in retirement has become more complex throughout the decades. It's also possible that some folks don't give up their jobs due to financial myths. Here, we cover three of those myths.1. You must retire debt freeIt would be great if everyone could move into their retirement years without debt, but that's not always realistic. According to a report from the Center for Retirement Research at Boston College, 63% of U.S. households over 65 carry debt. If you're waiting until you're debt free to retire, you may want to try the following:If you don't already have one, create a household budget. Budgeting apps can walk you through the process. You can link your financial accounts (such as your checking account) to them and see where your money goes.Based on your current budget, estimate a post-retirement budget. Include each bill you expect to carry after you retire. That includes housing, transportation, utilities, groceries, and consumer debt.Decide which debts you want to pay off before retirement -- ideally, credit card debt, as it is likely costing you a lot in interest. The right debt payoff app can help you determine which debts to tackle first.Add together all expected sources of income, including Social Security, pensions, annuities, investment income, and any funds you plan to draw from a retirement account. You'll probably still need to pay taxes in retirement, so you'll want to subtract those dollars from your expected income.Compare your expected income to your expected monthly debt. How does it look? Will your income be sufficient to cover debt?It's okay to enter retirement with debt as long as you can afford to pay it. If your cost of living is relatively low, you can get by in retirement with far less money than a person buried in bills.2. Retirees should have enough money to travel the worldIf pharmaceutical commercials are to be believed, retirees spend all their spare time traveling the globe. If that's what you want, it's a great goal.However, if your idea of the perfect retirement is to spend more time with family and friends, putter around the garden, or check out every fishing hole in your state, your post-retirement budget will look very different from a person with more expensive dreams. What you need is personal and largely based on what you want your retirement to look like.3. We're all doomed to run out of moneyFear is a powerful motivator. It's a primal instinct designed to help us avoid catastrophes, and an instinct people can use to manipulate us. When someone tries to sell you gold by saying that the country is facing economic collapse, it may be because they're willing to scare you into giving them money.When someone says you're in big trouble if you don't have $2 million put away for retirement, they're likely trying to sell you a book. When a politician swears that your golden years will be miserable unless you vote for them, they're not above appealing to your basic fear instinct.Whether you began saving for investment in your 20s or your 40s, what matters most are these three factors:How you want to spend your retirementYour specific post-retirement budgetYour expected retirement incomeIf you haven't decided what your ideal retirement looks like, now is an excellent time to consider that question. If you have too many bills to get by in retirement, use this time to create a payoff plan. Finally, if your retirement income will not be enough to support you through your golden years, it's time to come up with ways to increase that income. A great financial planner can help you determine how ready you'll be for retirement and brainstorm ideas for making those years more comfortable.Alert: highest cash back card we've seen now has 0% intro APR until nearly 2026
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