INDUSTRY INSIGHT
RETIREMENT
SPONSORED CONTENT
How to Avoid Three Common Myths Standing in the Way of Retirement Security
Today , most of us expect to live longer , healthier and more active lives . How are you going to spend your time in retirement ? Will you visit family ? Travel ? Volunteer ?
The possibilities are endless but when you do decide , the next step is determining how your choices translate into dollars and cents . So ask yourself : can you afford the lifestyle you envision ? Will you have dependents ? What will my other expenses be ?
These are just a few of the questions that need answering , but following through still does not guarantee a dream come true . There are 3 popular myths about retirement that you want to avoid falling prey to .
Myth # 1 — Lower Expenses in Retirement
In the past , it ’ s been suggested that a good target for retirement income was 50 % to 80 % of pre-retirement after-tax income . However , your mortgage might not decrease , your healthcare and insurance costs may increase and with more free time you may tend to spend more money , depending on your situation . In short , you can ’ t just assume your retirement income needs will decrease during retirement . A good tactic is to base your planning on a range of scenarios .
Myth # 2 — My Social Security and Pension will be Enough
Traditionally , income at retirement has come from three sources — government programs , employer-sponsored plans , and private savings . However , today private savings is becoming an increasingly more important part of the equation .
Social Security was never designed as an alternative to personal responsibility . And , the higher your pre-retirement income , the less you will receive from Social Security as a percentage of pre-retirement income . When it comes to employer-sponsored pension plans , the trend in recent years has been for employers to offer tax-advantaged retirement savings plans to employees instead of employer funded pensions . One difference is that while a pension plan is guaranteed , a retirement savings plans ( 401 ( k ) plans are the most popular ) are subject to the ups and downs of the stock market . Another difference
is that retirement savings plans today are often funded largely with the employee ’ s contributions .
If you fail to contribute or make poor investment choices , the benefits you receive from your retirement savings plans could turn out to be less than expected .
Myth # 3 — I Know How Long My Money ’ s Going to Last
Life expectancy is on the rise . You may end up being retired longer than you were in the workforce and this can make a big difference in how much you have to save while still working . Your life expectancy can make a big difference . For example , if you start with a retirement nest egg of $ 775,000 and earn 6 % on your money , you can expect to receive about $ 75,000 per year for 15 years before your money runs out . If you live 20 years in retirement , you will need to start with $ 915,255 instead of just $ 775,000 , to stay in the money for the duration of life .
After dispelling these myths , you may want to recalculate the estimate of what it ’ s going to take to finance the retirement lifestyle you envision . If you ’ re like many people , you may encounter a gap between what you need and what you can expect to have . Your choices are pretty straightforward :
• Delay your retirement date .
• Reduce your retirement income goal .
• Increase your savings level .
• Increase the return on your investment .
A well thought-out retirement strategy can be flexible enough to incorporate these changes .
A financial professional can get you started and help you monitor your strategy over the years .
Neither Prudential Financial , its affiliates , nor its financial professionals , render tax or legal advice . Please consult with attorney , accountant , and / or tax advisor for advice concerning you particular circumstances .
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Megan Walsh Paull , RICP ®, LUTCF , FSCP ®, is a Financial Advisor with Prudential and is a member of Prudential ’ s prestigious President ’ s Council and Masters Council . She can provide assistance on a range of financial needs – from evaluating insurance needs to helping clients meet their financial goals . Megan has experience in building and maintaining close client relationships , founded on the basis of trust , respect , and integrity and she works tirelessly to help her clients achieve their goals .
No matter what stage of life you find yourself in , as a Prudential Financial Advisor , Megan can help you find solutions to your financial challenges . So whether you ’ re “ Just Starting Out ,” “ Settling into Retirement ,” or somewhere in between , Megan would like to discuss your current financial situation , goals and challenges . She will help develop a strategy to help you find solutions to your financial challenges and meet your goals .
Provided courtesy of Prudential . Megan Walsh Paull offers investment advisory services through Pruco Securities , LLC ( Pruco ) ( Member SIPC ), doing business as Prudential Financial Planning Services ( PFPS ), pursuant to separate client agreement . Megan offers insurance and securities products and services as a registered representative of Pruco and an agent of issuing insurance companies .
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“ Preparing for retirement is always important , but the 5 years prior are crucial . It ’ s important to start planning as early as possible .”
Megan Walsh Paull RICP ® , LUTCF , FSCP ®
Financial Advisor
The Prudential Insurance Company of America 1001 Ardmore Blvd , Pittsburgh , PA 15221
t . 412-600-6952 | f . 412-731-6046 megan . e . walsh @ prudential . com prudential . com / us / megan . e . walsh
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