Current Retirement Myths and How to Stay on Top of the Changing World
Retirement advice. Often coming from an older relative and unsolicited, this advice can actually hurt retirees in today’s world. These pieces of advice, now more retirement myths, often rely on outdated assumptions about healthcare, lifespans, taxes, and markets.
Experts have now changed their tune, providing new ways to manage your money and have a fruitful retirement with an individualized plan.
Related: 6 Best Personal Finance Apps for 2025
Retirement Myths to Be Aware Of
According to a report in SavingAdvice, a lot of the well-meaning advice giving in retirement communities often applies to a world that doesn’t exist. Markets, health costs, tax rules, and lifespans have all shifted over the years, and now some of those tried and true rules are strictly retirement myths, and can hurt your progress.
Keep reading to learn about six of these retirement myths and how to change them into usable pieces of advice in today’s world.
The 70% Rule
More commonly known as being able to live comfortably on 70% of your pre-retirement income, the rule emerged when defined-benefit pensions were common, healthcare was cheap, and retirees had shorter retirements. Now, the percentage often falls short of what retirement requires.
Studies have shown that older couples can pull in hundreds of thousands in medical costs alone, showing how older lifespans can affect how much income you need to live comfortably.
Instead, experts recommend building your plan from the ground up, including housing, healthcare, transportation, leisure, inflation, and longevity, and how that balances with Social Security and pensions.
Check Out: 10 Ways To Make Your Social Security Check Stretch Further This Month
Always Buy Your House
While older generations may see renting as throwing money away, this is not the case today. The continual costs of property taxes, insurance, maintenance, and repairs can put a strain on fixed incomes and reduce liquidity.
In some situations and housing markets, it may be more beneficial to rent a home. This allows for less upkeep burden, more flexibility if needing to move, and more.
When deciding about renting or buying, create a cost comparison between the two and how much money you have to realistically play around with.
Stick to Safe Investments During Retirement
While it may seem like the right choice to shift your investments into cash and bonds near retirement, it could create another type of danger: too little growth to keep up with inflation. With retirement periods ranging up to 20-30 years, it could become harmful to keep your money in lower-risk places.
Instead, create a diversified asset mix that aligns with your spending limits and tolerance for volatility in the market. This can also be referred to as the “bucket” approach.
Also Read: 10 Best Affordable Cell Phone Plans for Seniors in 2025
Pay Off Your Mortgage No Matter What
Being mortgage-free may sound like a huge plus in retirement, but sometimes it’s not universally optimal. With the market constantly shifting, there are several aspects to pay attention to when deciding to eliminate a mortgage and whether it would be counterproductive. These include low current mortgage rates, potential investment returns, tax and liquidity consequences of large withdrawals, and the importance of emergency reserves.
To assess your position, compare your mortgage rate to realistic after-tax expected returns from other investments and liquid savings to reduce your payments quickly by dumping money into your mortgage.
Social Security Will Cover Basic Needs
Social Security was not designed to replace full pre-retirement income; instead, it’s used as a supplement. The average monthly benefits for retired workers in recent years have been well below typical monthly household costs for housing, healthcare, and food.
Instead of relying solely on Social Security, integrate it into a diverse retirement income plan that balances with pensions, earned incomes, and tax-deferred accounts.
Check Out: 10 Top Budget-Friendly Grocery Stores for EBT Users in Your State
You Don’t Need Life Insurance in Retirement
For some, life insurance is redundant or not needed. However, it does still serve a purpose for specific financial roles for some, such as providing liquidity for final expenses and estate settlement, replacing lost survivor income for a spouse, or a bridge for long-term care.
When retiring, review your needs with an advisor or trusted planner before canceling or applying for coverage. While life insurance may be the best option for some, there are other options to explore.
Why Outdated Advice Persists
Outdated retirement myths continue to be passed around because they are familiar and have worked for several prior generations. However, in today’s world, many of these can be either not useful at all or harmful to your financial well-being.
To find the best advice, make sure you know how old the recommendation is and use current tools and experts to either validate or discard the advice.
Read More: 8 Best Places to Retire in the US for Your Money
A Current Retirement Checklist
When approaching retirement, you might want to follow a few of these guidelines to have a more successful retirement, or talk to a professional.
- Stress-test plans for longer lifespans, higher health costs, and market volatility.
- Compare the liquidity tradeoffs of paying mortgage debt versus investment growth.
- Social Security is a partial income.
- Reassess insurance needs with the importance of liquidity and long-term care.
- Seek professional opinions before making significant moves.
By following these rules and guidelines, prospective retirees will be able to avoid the retirement myths listed above. The best way to prepare for your retirement is by getting up-to-date facts about the economy and individualized planning based on your wants and needs.