The 11 Biggest Retirement Lies We Tell Ourselves

Laura Shin

4. I’m counting on Social Security, so I don’t need to save that much.

Maybe today’s retirees can say this. But the future of Social Security is so uncertain that anyone retiring in the coming years should not plan to rely on it. Why? The amount of money going into the program is not enough to give everyone the benefits they’ve been promised. Thankfully, the Chase/LearnVest study shows that seven in ten women are not confident that they will receive Social Security. But if you are one of the three in ten that believes you will, listen up:

If you’re 25 now, and you earn a hefty $115,000 a year now, you can expect to receive only about $3,231 a month in today’s dollars ($38,772 a year) if you retire in 2051 at age 70. Of course, this is the best-case scenario. If you’re 25 and earn $35,000 a year (much more likely), you can expect to only get $977 a month ($11,712 a year) if you retire at 62. That’s poverty-level income.

5. I deserve to have fun with my money today–I work hard for it.

Saving for retirement is not an either/or proposition. You can save for retirement and enjoy life now. Here’s how: the 50/20/30 Rule. This budgeting guideline says that:

  • No more than 50% of your take-home pay should go toward your Essential Expenses, which include housing, transportation, groceries and utilities.
  • At least 20% of your take-home pay should go to Financial Priorities, which include retirement contributions, savings contributions and debt payments. (Plus, if your employer offers a retirement plan, such as a 401(k) or a 403(b), you should be be contributing additional money toward retirement before your paycheck hits your bank account.)
  • Lastly, no more than 30% of your take-home pay should go toward your Lifestyle Choices, which covers the fun you can have today: shopping, entertainment, personal care, the gym, gifts and more.

So, yes, you do deserve to have fun with your money today–just not at the expense of tomorrow. (Learn more about the 50/20/30 Rule.)

6. A big inheritance is coming my way someday.

This is a case of counting chickens before they hatch. The inheritance you feel sure to collect could be devoured by medical bills, it could dwindle away in another financial crisis, or you could find the wealthy relative you expected to inherit from is living far longer than you expected. You may also end up needing that money to pay off debts or taxes. While it certainly would be nice if you inherit money and you could put all of it toward your retirement, thinking you can do so is not a plan; it’s a gamble.

It’s better to rely on yourself to fund your retirement and then to enjoy your inheritance as a bonus if you do indeed receive one.

7. I’ll be able to use the equity in my home to retire on.

This retirement lie raises two big questions: Where will you live in retirement? And what if the market is down when you want to sell?

Okay, we’ve got a third question: Remember the housing crisis a few years ago?

  • Elissa Backas

    Ha ha, my husband will be relying on me when we retire :P My 401K is in pretty good shape and I’m only 27. Yay me. Of course one day, all hell could break loose and the dollar may be worth nothing in which case all of us responsible people will look awfully silly, but we’ll have bigger problems to deal with than that. Or aliens, aliens could invade.

  • Ana

    It’s especially hard to save enough in different retirement “baskets”. I have a pension and a 457 and a ROTH and I’d like to contribute more to the ROTH because that seems a little more secure than the stock market but it’s hard coming up with enough extra to save in the ROTH on top of a 457 and pension. 

    • Rima

      I’m in the same boat Ana.  Although we are lucky to have these problems as its rare to have a pension in this day and age.

  • Natalie

    That’s easy to say, but raising my son takes precedence. Between daycare and rent/mortgage, there’s not much left. Single parents -especially those who don’t get help from the absent parent – make due without for the sake of their children. However, this article is very well written and includes much practical information. I will certainly keep many of these points in mind as the years progress. Thank you.

  • Frank

    I like the phrase – ‘a man is not a plan’ …

    • Daniel

      A man, a plan, a canal. Panama!

  • Vonetta

    It’s hard for me to consider having kids, even though I’m 38 and the clock is ticking. Right now, it’s hard enough taking care of myself, paying off student loans, debt and saving for retirement while also having some money left to go out and you know, actually have a social life. So I can find the elusive Mr. Right, get married and have the aforementioned kids! Can’t imagine saving for retirement and college tuition. Hope my future offspring study hard and get a scholarship.

    • Casggp

       I’m right there with you Vonetta and wonder if it’s even a choice for me now.  I’m 36 and stopped working when my father unexpectedly passed away to keep the family together.  My “Mr. Right” changed his mind about having kids along the way and didn’t tell me for years.  Now I’m looking for a job and a new relationship, but I think the clock may have timed out on me.  I personally feel that I should be stable in both arenas before even having kids….but stability isn’t happening soon.  As this rate, I might  have have to choose saving for retirement over having kids.

      • Vonetta

        I guess it’s comforting to know that others are in the same boat. It’s just the reality for many of us. For me, it was a combo of not finding the right guy and being careful not to get pregnant and becoming a single mother. Having a kid is not ideal when I’m trying to get myself together and stay afloat after years of making smart decisions (like going to college and having roommates to save on rent) and not so smart decisions (taking a low-paying job and living off of credit cards when getting laid-off and buying things I couldn’t afford). Hopefully, the next decade will bring many good things and things will fall into place. 

    • Vicky

      56, married to 61 and thinking about retirement. Can’t imagine why people are going for the right wing rhetoric that is resulting is lowering benefits for SS and medicare. People brag about having $74k in 401k funds! What, are you kidding! Our system is not working, and all of you out there better start spending less on worthless junk and start saving! Ths idea that you can keep working is a dream too! Once you’re pushed out of that good job, the only places that will take you are Walmart and Home Depot!

  • uhhuh

    The tone in #1 kind of bugs me. Maybe I’m just not the intended audience here–but then, why am I receiving these emails? In any case, I actually DON’T have $20/week (married with three kids and pinching every penny already). And we already pack our damn lunches. I think it’s the assumption that we don’t that bugs. :P Full disclosure, we do have SOME retirement savings, just not enough and it’s hard to imagine where that money is going to come from.

  • johndogsan

    41 years old with $500,000 in retirement savings. Lived below my means and maxed out my 401k. I do not spend money on $5 Starbucks or other “luxuries” that I could make in my home for 0.25 cents. I’m going to retire at 59 with plenty of money to travel. The key is drawing up a budget, making a plan, and sticking to it.

    • Chicago

      Amen. I’m right there with you I just have to work until 62. So far my plan has worked for us very well. We plan for the worse and pray for the best. Good plans go a long way.

    • Julie Pham

      Do you have kids?

      • bob

        great question. why isn’t this a central part of the dialog, given the investment each child requires?