3 Myths About Retirement That Aren't True

Most people don't start their careers thinking about retirement. Sure, they make their contributions to Social Security, Medicare and retirement plans, but often don't actually think about when they will retire or what their lives will be like when they’ve stopped working full time. While being preoccupied with one's current career is understandable, not considering, and researching, retirement options can lead people to accept certain misunderstandings about retirement planning.

Here are three of the most common myths about retirement:

Financial Security After Retirement is Guaranteed

Individuals who do not actively plan for retirement may be in for an unpleasant shock when they reach middle age. This is because they may have been relying on programs like Social Security, Medicare or workplace retirement plans without a full understanding of what their finances will look like after retirement. Cuts to benefits, the possible loss of a pension plan or poor management of retirement account funds can all lead to an uncertain financial future: One that may force a person or couple to delay retirement.

There Is a Set Age for Retirement

Many people consider 65 to be the optimal age for retirement. The reality is, however, there is no one right age for retirement. Some people are in a good position to retire early at 55, while others may be hard at work at 75. Health and personal preferences is often an important factor in deciding when to retire. Finances, however, are another consideration: Some people simply cannot afford to retire until they reach their 70s.

Buying is Better Than Renting in Terms of Downsizing

As many people age, living in and maintaining their current residence doesn’t fit their needs. Many seniors will want to downsize and purchase a new, smaller home after retirement. While buying a home for retirement, or staying in your current residence, may be a good idea, it isn't necessarily the right choice for everyone. Renting an apartment home in an active adult community might be a better choice. Here are a few reasons why:

1. Your situation may change: Renting an apartment home offers flexibility owning does not. If you decide you would prefer to live in a different part of the country, need to be closer to family members or experience another change that requires you to move, you may have to sell your home before you move. Renters are able to fulfill the terms of their lease and move on without having to worry about what will happen to their current home.

2. Real estate markets aren't always stable: While purchasing a home can be a good investment, this isn't always the case. In some areas, a real estate downturn could make it very difficult for you to recoup your investment or even sell your home. While you may be able to ride out a depression in real estate prices, not everyone has the luxury of being able to wait months or even years before real estate values go back up.

3. Renting may cost less than buying: Renting a home, particularly in a 55+ community that offers resort-style amenities may prove to be less expensive than paying a mortgage. This is because homeownership carries with it a number of hidden expenses, including taxes, maintenance and repair costs, landscaping, and homeowner’s association fees. In addition, retirement and active adult communities include shared amenities such as fitness centers, continental breakfasts, entertainment, and activities in your monthly rent.

However, there is no one-size-fits-all when it comes to making decisions about retirement living. It's important to crunch some numbers and talk to your financial advisor about your options before making a decision. It’ss also a good idea to explore different active adult and retirement communities to better understand what they have to offer and choose a housing option that's best for you.