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Dr. Kalinda Rose Stevenson
Do You Know The Greatest Mistake In Most Retirement Advice About Retirement Income?
Welcome back!
Do you need a certain amount of retirement income to retire? After reading many articles addressed to consumers about the need to save money for retirement, I have concluded that much of this advice is based on restricting assumptions about money. As a result, much financial retirement advice is bad retirement advice.
Most personal finance retirement planning articles compile the usual retirement planning topics and cite them as reasons to be afraid that you don’t have enough money to retire:
Most people have not saved enough money.
Prices will go up and up.
You will probably need more for medical expenses as you age.
And worst of all (!), you might live 20-30 years after retirement at age 65 and will probably outlive your money.
Retirement advice articles often list various expected expenses, to help you calculate which expenses will increase and which will decrease, to help you determine how much retirement income you will need.
One typical assumption of most retirement planning articles is that you will pay off your mortgage. Another typical assumption is that your retirement income will be limited to retirement funds, pensions, and Social Security.
Based on these assumptions, the articles give you guidelines about how much of your retirement funds you can tap into each year. The goal is to prevent you from running out of money in retirement.
As a result of unexamined assumptions, these articles omit any consideration of the single most important skill required to live those 20-30 years beyond retirement age in abundance: how to make money. Instead, they teach fear.
The assumption that produces money fear is that your retirement income will be fixed. After you retire from your job, you will not earn any more money.
In other words, you must face 20-30 years of money uncertainty. Your future depends on how much money you set aside during your earning years. Can you imagine a greater money limitation than the idea you have no capacity to increase the amount of money available to you?
If you believe the assumptions behind typical personal finance retirement planning advice, you have to imagine living 20-30 years without making any new money, completely dependent upon what you earned in your working life.
This type of retirement advice also makes another unexamined assumption. The decisions of other people will determine how much retirement income you will have available to you.
What decisions will other people make? Other people will decide whether or not you still have a pension. Other people will decide if you will still receive your Social Security income. Other people will decide how much interest you will earn on your “safe” savings accounts and CDs (certificates of deposit), and the returns on your mutual funds.
These articles create fear because they teach that your future depends upon your present. The underlying assumption is that you will have no other sources of additional income in the future. Your security depends on how much money you can earn and set aside right now.
What is the overall message of such articles? You are powerless to increase your retirement income after you retire from your job.
By Kalinda Rose Stevenson, Ph.D.
Author of No Money Limits For Real Estate Investors
National Best Books 2007 Awards
Winner
Business: Real Estate Category
Visit www.NoMoneyLimits.com for your Free “52 Heart Of Money Insights” ecourse.
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