The Greatest Mistake In Retirement Advice About Retirement Income
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by: KalindaRoseStevenson,PhD
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How much retirement income is necessary for you to retire? After reading much financial retirement advice addressed to consumers, I have concluded that much the retirement advice about saving money for retirement is bad advice because of its limiting assumptions about money.
Most personal finance retirement planning articles round up the usual suspects of retirement planning and list them as reasons to be afraid that you don't have enough money to retire: Most people have not saved enough money. Prices will go up and up. You will probably need more for medical expenses as you age. And worst of all (!), you might live 20-30 years after retirement at age 65 and will probably outlive your money.
Such retirement advice articles explain all the ways you can calculate how much retirement income you will need, what costs will go up and what costs might go down.
These retirement planning articles typically assume that you will pay off your mortgage. They also assume that your retirement income will be limited to retirement funds, pensions, and Social Security.
These articles often help you figure out how much of your savings you can withdraw each year to avoid running out of money.
What is the result of such articles? They teach fear instead of the most important skill that would allow people to live those 20-30 years beyond retirement age in abundance. They do not teach people how to make money.
The assumption that produces money fear is that your retirement income will be fixed. After you retire from your job, you will not earn any more money.
In other words, you must face 20-30 years of money uncertainty. Your future depends on how much money you set aside during your earning years. Can you imagine a greater money limitation than the idea you have no capacity to increase the amount of money available to you?
According to typical personal finance retirement planning advice, you are supposed to imagine living 20-30 years without making any new money, completely dependent upon what you earned in your working life.
This type of retirement advice also depends on an unstated assumption that the amount of money you have available to you as retirement income also depends on the decisions of other people.
Other people will decide whether or not you still have a pension, whether or not you still have Social Security income, the amount of interest you earn on your "safe" savings accounts and CDs (certificates of deposit), and the returns on your mutual funds.
These articles create fear because they teach that your future depends upon your present. The underlying assumption is that you will have no other sources of additional income in the future. Your security depends on how much money you can earn and set aside right now.
What is the overall message of such articles? You are powerless to increase your retirement income after you retire from your job.
About the Author
Kalinda Rose Stevenson, Ph.D. Discover how making money is different than earning money in a real estate investing book, "No Money Limits." Go to http://www.NoMoneyLimits.com to get your Free "52 Heart of Money Insights."
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