4 Retirement Rules You May Want to Rethink

A recent AAA study found something that probably will not surprise anyone who spends much time behind the wheel.

Speeding has become pretty normal.

Going 10 miles per hour over the speed limit is widely considered acceptable, and nearly half of those surveyed believe keeping up with traffic can actually be safer than strictly following the speed limit.

I like to get places quickly myself, so I understand the mentality.

When everyone around you is moving at the same speed, you tend to move with them.

But that got me thinking about retirement.

How many financial decisions do people make because everyone around them is doing the same thing?

I see it more often than you might think.

Retirement Rule 1: You Should Retire at 65

Age 65 is certainly an important milestone because of Medicare eligibility.

But it is not a mandatory retirement date.

Some people are financially and emotionally ready to retire before 65. Others reach 65 and still love working.

Your retirement date should be based on your income, healthcare, savings, Social Security strategy and what you actually want your life to look like.

Do not retire at 65 simply because you think that is what you are supposed to do.

Retirement Rule 2: You Should Become Conservative When You Retire

Your investment strategy may need to change when you retire.

But that does not mean you automatically need to move everything into conservative investments.

Retirement could last decades.

During that time, inflation can increase the cost of living. Taxes can change. Healthcare expenses can rise.

You may still need growth.

That is why I like to think about liquidity, income, and growth separately.

Once we understand what you need for emergencies and income, we can have a much better conversation about how much risk makes sense with the rest of your money.

Retirement Rule 3: You Must Pay Off Your Mortgage

I understand why people want to enter retirement debt free.

For many people, eliminating the mortgage can provide tremendous peace of mind.

But how you pay it off matters.

If you withdraw a large amount from a traditional IRA or 401(k), you could potentially create a significant tax bill.

Maybe paying off the house is still exactly what you want to do.

Great.

Now let us look at whether there is an efficient way to accomplish it.

The financial plan should support your goals rather than tell you that your goals are wrong.

Retirement Rule 4: Claim Social Security When Your Friends Do

I have seen this several times lately.

Someone claims Social Security because a friend claimed at the same age.

Your friend is not your retirement plan.

Social Security can be an important source of retirement income, and deciding when to claim deserves careful consideration.

The right claiming age can depend on your other income sources, retirement savings, marital situation, longevity considerations, and the rest of your financial plan.

What worked beautifully for your neighbor, coworker, or brother in law may not be right for you.

What Is the Best Retirement Strategy?

The best retirement strategy is one that works in sync with what you are trying to achieve.

That is something I constantly remind families about.

It is your plan.

You are the one who has to live with it.

An advisor should bring knowledge, experience, and ideas to the conversation. Sometimes the numbers may tell us that something needs to change. Other times there may be several perfectly reasonable ways to accomplish a goal.

The important part is having the conversation.

Retirement should not be about blindly following conventional wisdom.

Retiring at 65 may be right for you.

Paying off the mortgage may be right for you.

Claiming Social Security at a certain age may be right for you.

Being more conservative with your investments may be right for you.

But "everyone else is doing it" is not a retirement strategy.

Do something because it is best for you.

If you are approaching retirement and wondering whether some of the rules you have always heard actually make sense for your situation, that can be a worthwhile conversation to have. Our team at Legacy Retirement Group can help you look at how your income, investments, taxes, Social Security, and personal goals fit together. Visit LegacyRetirementGroup.com or call our office at 614 336 7660.