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Breaking down 6 common retirement planning myths

Financial myths can make it difficult to plan your retirement — and then stick to that plan. When mapping out your retirement years, it’s critical to have the right information.

Here are six common retirement myths dispelled:

Myth #1: I don’t need to revisit my withdrawal rate

Historically, a general rule has been that a properly diversified portfolio could last 30 years with withdrawals of 4% or less and annual increases to match the rate of infation.

However, there isn’t a one-size-fits-all number. Figuring out the best retirement plan and withdrawal strategy should take into account your current finances, future income, goals and other considerations unique to you. What's more, your plan and withdrawal rate may change as your circumstances change.

Consider these approaches:

  • If you’ve recently retired or are nearing retirement: Regularly review withdrawal rates. This is a smart way to keep an eye on how current stock prices and the rate of inflation may impact returns in your investment portfolio. The ability to adjust your retirement income level based on market conditions and your circumstances can help you address uncertainty or the unexpected.
  • If you’re young or mid-career: Planning for a 3% to 4% withdrawal rate may be reasonable over the long term.

How a financial advisor can help: Because your advisor knows the details of your unique situation, they can recommend a personalized withdrawal strategy and then continue to review your rate to determine the right number for you.

Myth #2: Medicare will cover all health care costs

A common retirement planning myth is that Medicare will be enough for any and all future health care costs. Medicare is a valuable program for many retirees, but it wasn’t designed to cover everything. For example, deductibles and copayments (which can be significant), as well as the cost of care for dental, vision and hearing conditions are not covered. In addition, coverage for nursing home and other long-term care is limited.

Consider the solutions:

Medicare supplement insurance (Medigap) Medicare Advantage plans Living benefits rider Hybrid policies

From a private issuer

Can help fund remaining copayments, coinsurance and deductibles


From private companies who contract with Medicare

Can provide all your Part A and B benefits (excluding hospice); many plans also offer prescription drug coverage

Part of a life insurance policy or annuity contract

Can enable you to advance part of the policy benefit to pay for expenses if you’re diagnosed with a life-threatening illness



Combines life insurance with long-term care benefits
May help you pay for the costs of a nursing home, assisted living or in-home care; can be more affordable than traditional long-term care policies


How a financial advisor can help: They will factor in anticipated health care expenses and recommend solutions to help you prepare for these costs in retirement.

Myth #3: Social Security won’t last

Though the solvency of the Social Security program is an ongoing topic of conversation, if you’re already in retirement and receiving Social Security benefits, it is not likely to materially affect you. 

If you're near or farther away from retirement, know that your Ameriprise financial advisor will continue to track how much of an impact the changes to Social Security could have on your plan. They regularly review and update your retirement income strategy to ensure it accounts for, and addresses, any regulatory changes.

Regardless of how far you are from retirement, keep in mind that Social Security alone cannot provide enough income for most individuals. 

How a financial advisor can help: As you near retirement, your advisor will work with you to estimate your Social Security benefits as part of your overall planning and budget. They can also help you build additional flexibility into your personalized retirement income plan and potentially recommend solutions for reliable income in retirement, if appropriate for your situation.

Myth #4: I can work for as long as I need to

Longer life spans may mean more years in retirement and possibly more years working past age 65. However, given the uncertainties of aging, it may not be realistic to expect to work as long as you need or want to. For example, half of all early retirements are due to illness or disability.

How a financial advisor can help: They can help you develop a personalized retirement planning and income strategy, including solutions to help shield your assets against the unexpected — like retiring earlier than planned.

Myth #5: I’ll spend less (and pay less taxes)

Depending on your goals, you may be spending more in retirement than you thought you would, especially if you are travelling, visiting children and grandchildren and pursuing new hobbies and activities. Additionally, inflation can erode your purchasing power over time.

Another related misconception is that you'll pay less in taxes once you're retired. But that assumes you'll have less income. If you end up with the same amount of income in retirement as you had when you were working, you may not be in a lower tax bracket. Also, you may qualify for fewer tax breaks such as mortgage and college savings deductions. Tax rates may also rise in the future.

How a financial advisor can help: They can help you develop a budget for retirement and recommend a tax-efficient, retirement-income strategy specific to your situation.


How to plan for retirement

Retirement is typically the biggest financial goal people save for in their lifetime. See key steps to help get started on planning for retirement.

Learn More

Myth #6: I'll live in the same place throughout my retirement

You may think that by the time you retire, your mortgage will be paid off and your housing costs will be set. However, moving is often a reality during the retirement years. For instance, you may decide to move closer to family members or into an urban area for the culture and convenience. You may find you need an assisted living situation or a community with more transportation and maintenance services at hand.

How a financial advisor can help: They can help assess your individual situation and recommend ways you can prepare for unexpected moving costs in retirement.

We’re here to help with your retirement planning needs

You’ve worked hard to save for retirement — and deserve to enjoy it with confidence. As you plan for these years, know you can lean on your Ameriprise financial advisor for personalized advice based on your goals and needs.

Start on your path to financial confidence today with help from an Ameriprise financial advisor near you.

Or, request an appointment online to speak with an advisor.


At Ameriprise, the financial advice we give each of our clients is personalized, based on your goals and no one else's. 

If you know someone who could benefit from a conversation, please refer me.

Background and qualification information is available at FINRA's BrokerCheck website.

1 From an Ameriprise report for retirees, “Planning for a more confident retirement”, published April 2019.
Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consult your tax adviser or attorney regarding your specific situation.

Investment products are not insured by the FDIC, NCUA or any federal agency, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value.

Ameriprise Financial Services, LLC. Member FINRA and SIPC.

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