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The idea of retirement should be exciting.
You work for years and years, and eventually, you don't have to anymore. You can move to Europe with your spouse, spend your days going on hikes or relaxing by the beach, and finally shed off the stress of that nine-to-five.
Instead, the word "retirement" scares people. Everyone wants to retire, but not everyone is sure they can. The fact of the matter is that 22% of Americans have less than $5,000 in retirement savings - which simply isn't enough to live the retirement of your dreams.
Now, the financial news networks will use statistics like these to scare you. You've seen them - there are thousands of fear-inducing articles all over the Internet. They tell you you'll never retire, and then they'll give you a list of what they consider the best ways to save.
Sure, the suggestions these websites peddle aren't necessarily bad. But they aren't the best ways to save - not even close.
Here's the latest round of false advice - and what you should do instead...
The Most Common Retirement Myths - Busted
Retirement Myth No. 1: Purchase an Immediate Annuity When You're Ready to Retire
An immediate annuity is basically a guaranteed income that begins right away. But in order to receive that income, you have to first have enough money to buy it. Often, these include high fees, and that "guarantee" is confusing. Sure, you'll make some money with this - but it's certainly not the smartest way to save.
Retirement Myth No. 2: Buy a Deferred Annuity with a Withdrawal Benefit Rider
This is similar to buying an immediate annuity, except you have to deposit funds today in order to get money 10-plus years into the future.
The more money you add to your account, the bigger your future guaranteed withdrawal amount is. You know the old saying, "You need money to make money"? That applies here.
Retirement Myth No. 3: Generate a Pension
Some employers provide workers with a guaranteed retirement income, often in exchange for years of service. I know plenty of people that have benefited from a pension, like war veterans. They're a good thing, don't get me wrong. But you should never decide your career based on whether or not the company offers a retirement income. That's like selling your soul!
Find the career that you want. You don't need a pension in order to live a stress-free retirement.
Retirement Myth No. 4: Claim Social Security at a Later Age
If you wait to claim Social Security, you can end up taking bigger payments. That much is true. But that means you have to live frugally until then. And as we know, Social Security may not even be around in the future.
So, don't spend your life digging for pennies in couch cushions just so you can receive bigger Social Security checks. That could end up causing you a lot of unnecessary added stress - and it may not even pay out in the long run.
Retirement Myth No. 5: Reverse Mortgage
A reverse mortgage is basically a loan that allows you to borrow from your home's equity. This loan may promise income for life, but it comes with a long list of drawbacks...
Essentially, you're burning your equity in exchange for secured income today. Loan balances increase over time as interest on the loan and fees accumulate. Your loan will become due when a "maturity event," like your passing, occurs. If you wish to pass along your home to heirs, you're also giving them the burden of repaying that loan.
About the Author
Tom Gentile, options trading specialist for Money Map Press, is widely known as America's No. 1 Pattern Trader thanks to his nearly 30 years of experience spotting lucrative patterns in options trading. Tom has taught over 300,000 traders his option trading secrets in a variety of settings, including seminars and workshops. He's also a bestselling author of eight books and training courses.
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