Don't worry, you're not alone - nobody thinks that retirement will happen to them. Particularly as we start our career, the thought of retiring (and sacrificing our salary to pay into a pension) is absolutely out of the question. Then, reality hits home.
Retirement is like taxes and death - it happens to everyone. Unfortunately, through the power of the internet, this means that there's a lot of misinformation doing the rounds about it.
Well, as you may have gathered, today is all about debunking these myths. Some are utterly damaging, so stay tuned to read what information you need to ignore at all costs.
Myth #1 - The government (or company) take care of everything
Well, if you haven't read the press, we would urge you to do so. This is arguably the most damaging myth that we are going to cover today - yet everyone seems to buy into it.
Just because you are contributing to a pension, it doesn't mean to say that you are automatically going to be looked after. On the contrary, you might receive some money, but whether or not this is going to cover your new life is debatable to say the least. It's not going to match your existing salary, unless you are on a very lucrative pension, so keep this in mind.
Myth #2 - I won't spend as much during my retirement
In short, you will.
Again, this is a common misconception, and we're not too sure where it comes from. After all, when you quit the world of work, you suddenly have more time on your hands. Sure, some of you might get creative and be able to spend that time without spending money, but few people fall into this category.
Instead, most of you will take up new hobbies or interests, and this will make you spend more money. Some people often decide to move to retirement areas (with Florida recently grabbing the headlines for this reason) so this is something else you need to budget for.
Myth #3 - I will retire at 65
If you were to browse Wikipedia, there are a whole host of different retirement ages around the world. The so-called standard seems to be 65, but it's not always like this.
As we have already said, not all pensions are equal. You might not have collected enough money for your pension pot, and this might mean that you need to work beyond those elusive 65 years.
Not only that, but this age seems to be rising. It might be set at 65 now - but there's no guarantee that it will still be at that in 20 years when you do decide to retire.
Myth #4 - You must pay off your mortgage before retiring
Sure, paying off your mortgage is a massive help and will help your plight considerably. However, if you make it your primary aim to pay off your mortgage, you might be missing a trick in other regards.
For example, if you happen to be on a really low interest rate, it's sometimes advisable to pledge your money towards other areas. Or, if you are planning on moving away from your home anyway, this won’t be an issue either. Do the math and then decide. Don’t fall into a trap of sticking to a historic “rule”.