In this episode of ThimbleberryU, we begin a two-part series debunking common myths about retirement. Jag and Amy Walls dive into the misconceptions that many people have when planning for their post-work years.

The first myth we tackle is the belief that you need $1 million to retire comfortably. Amy explains that while this is often thrown around as a benchmark, the reality is far more nuanced. Retirement comfort depends on various factors like social security, pensions, and personal expenses. Many retirees live well on less than $1 million, provided they have a balanced financial plan and modest needs. Everyone’s situation is different, and it’s important to consider your own income sources and expenses, rather than focusing on an arbitrary number.

Next, we explore the idea that retirement means never working again. Amy highlights that many retirees continue to work part-time, start businesses, or freelance to stay active and fulfilled. In fact, 56% of retirees plan to work in some capacity after retirement, according to a Transamerica study. Interestingly, however, studies show that those who make a clean break from work tend to be happier in retirement. The trick is finding purpose, whether through work, volunteering, or family.

We also address the common belief that downsizing your home will always save money. While this might seem like a logical step, it doesn’t always pan out financially. Real estate fees, moving costs, and potential renovations in the new home can eat into savings. Additionally, many retirees find themselves emotionally attached to their homes, especially when considering family gatherings or memories, making downsizing less appealing or practical.

Another popular myth is that all debt should be paid off before retirement. While it’s a comforting idea to enter retirement debt-free, it’s not always necessary or even beneficial. Amy notes that paying off debt might require large withdrawals from retirement accounts, which can lead to significant tax consequences. Instead, it’s important to assess your cash flow, the interest rates on your debt, and whether paying it off makes sense in the bigger picture.

Finally, we debunk the notion that Medicare will cover all healthcare costs. While Medicare is essential, it doesn’t cover everything. Gaps like long-term care, dental, and vision expenses can add up, with retirees needing an estimated $315,000 to cover healthcare costs. It’s crucial to plan for these expenses early and consider supplement plans or health savings accounts.

In our next episode, where we’ll tackle five more retirement myths.

To get in touch with Amy and her team at Thimbleberry Financial, call 503-610-6510 or visit thimbleberryfinancial.com.