It is likely safe to assume that 99.9 percent of physicians do not believe the myth of Sisyphus. They do not believe that he continues his eternal punishment of rolling a boulder up a hill only to see it roll down again, and again, and again. However, there are retirement myths, a bit less fanciful than the myth of Sisyphus, which remain firmly entrenched in the minds of physicians. These persistent retirement myths need to be continually debunked because they leave physicians and others susceptible to financial uncertainty, sluggish action, or complete inaction.
So, while Sisyphus toils in the lowest region of the Underworld, we have the freedom to debunk retirement myths.
The first three retirement myths are compiled by Physician's Money Digest®.
Retirement Myth: It’s too late to start a retirement plan
This myth is stubborn and persistent. It has been harming potential investors in every occupation and age group. The thought process goes something like this, “If only I had started saving years ago…oh well too late to worry about it now.”
Debunked. It is never too late to start saving for retirement, even if you’re close to the age you once thought would be your retirement age. Yes, starting earlier is always better, but cranking up your savings now can make a big difference in your retirement accounts.
Those over the age of 50 also benefit from the ability to contribute more each year to a 401(k) plan or individual retirement account (IRA). They are called “catch-up contributions.” “Catch-ups” exist because the situation is common.
Retirement Myth: If you choose to work longer, you won’t have to withdraw any of your funds from taxable accounts until you need them
Debunked: By age 70 ½ (with some exceptions), you’ll need to start taking distributions from your tax-deferred retirement accounts, even if you’re still a working physician. While you can still save, invest, and earn on the bulk of your retirement savings, amounts you must withdraw will start to impact the growth of your ongoing retirement investments.
Retirement Myth: Only those nearing retirement or in bad health need long-term care insurance
Debunked: Fewer healthcare professionals may fall prey to this myth, but it is worth reiterating. Estimates from Health and Human Services show that about 70% of Americans over the age of 65 will need long-term care at some point. Rates for long-term care insurance continue to rise alongside the cost of care. If you secure a policy while you’re still working and in good health, you’ll pay lower rates and feel more secure. Many experts recommend looking into long-term care coverage starting in your mid to early 50s.
With so many myths out there, why stop at three? Here, courtesy of Physicians Mutual are a couple more of these pesky retirement myths:
Retirement Myth: Budgeting for retirement is easy
Debunked: The biggest contributor to a retirement shortfall is having an unrealistic view of how much money it actually takes to retire. Many retirement experts recommend building some wiggle room into a retirement budget for hobbies or travel you want to do during retirement. Another concern is accounting for cost of living, which is usually about 3 percent per year. Some experts argue that figure could even be as high as 8 percent.
Retirement Myth: A second home is the best way to make retirement more enjoyable
Debunked: When considering retirement investments, think twice about purchasing a second home. While it might be tempting to purchase a vacation home, the added expenses could turn your retirement dream into a nightmare. In addition to the monetary strain a second home can cause, you also have the burden of maintaining two properties.
Retirement Myth: I'll have enough in the bank to live off the interest
Debunked: More often than not, many do not or cannot save enough to make this a reality. The good news is you have some other options when it comes to creating reliable income during retirement. One way to ensure a steady income stream during retirement is to purchase an annuity. An annuity allows you to put aside money, have it increase tax-free, and then receive a payment following a predetermined schedule for the rest of your life.
Planning for retirement is difficult enough in the best of circumstances with the best of retirement knowledge and professional advice. That is why these myths are so bothersome—they distract people from task at hand.
If you’d like more information on how to reduce your medical student loan payments so you can save more money each month or decrease the length of your loan period, call us today at (844) 226-LINK (5465). We’re here and happy to help.