Today I read something that disturbed me. I’m not talking about the verdict in the Casey Anthony trial although I could go on and on about mothers that get tattoos that say “Bella Vita” while their daughters are missing. How beautiful can life be when your child suddenly vanishes?

I digress. The article that disturbed me stated that a growing number of American now expect to keep working into their 70’s. Eeek! Who wants to do that!

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The First Command Financial Behaviors index compiles data on Americans financial behaviors, attitudes and intentions through monthly surveys. In their latest survey they found a sharp rise in the number of people that expect to keep working into their 70’s.  A year ago only 14 percent of U.S. consumers expected to work beyond the traditional retirement age, now that number has jumped to 22 percent.

I know I don’t want to work until I’m 70 years old. I want to work hard now while I’m relatively young so I can retire in my early to mid-sixties if not earlier.

The path to retirement is not clearly laid out. One financial broker will tell you one thing while another expert will tell you the exact opposite is true. It’s hard to know what’s true with all the misconceptions floating around out there.

Today I want to uncover five of the most predicated myths out there about retirement and how to reach it.

Myth #1: You’ll spend

It’s become a hard and fast rule of financial planners to tell clients that spending falls off sharply in one’s golden years. The rule of thumb is that retirees should expect to live off of 70 to 80 percent of their pre-retirement annual income.

Most people mistakenly believe this, but it is a myth propagated by the financial planning industry.  Most people believe that when they retire they will spend less on clothing because they don’t have to buy suits or business attire anymore. What nobody over 65 shops anymore? Please! Retirees don’t shop less they just change what they are shopping for!

They also think they’ll spend less because they won’t be eating out for lunch five days a week with co-workers. Take the advice from someone who works from home much like a retiree would, you get bored being at home all day and one way to get out of the house is to go out for a bite to eat. I’ve never heard a retiree proclaim, “I can’t wait to retire so I can cook at home more!” You will not spend less in this category either.

Others will try to argue that they’ll spend less in retirement because they won’t have to buy as much high priced gas to commute back and forth from work five days a week. Wrong! One of the top three hobbies retirees always say they want to do more in their golden years is travel! Weekend trips here and there, a visit to see your children, a vacation to any tourist spot across the globe will quickly help you reach your monthly gas budget.

The only thing about spending that changes in retirement is the areas in which you spend it. Money spent on entertainment and travel usually skyrockets while other areas like education and taxes go down.

Myth #2: A Million Dollars Is Enough to Retire On

A million dollars has long been the magic number most retirees aim (among us middle class folks) to acquire, a princely sum indeed. But in reality it’s not enough money anymore. If you earn six figures now and don’t want to trim your budget to a modest monthly allowance when you stop working, you will need far MORE than one million dollars to support yourself in your golden years.

Let’s look at the facts. Say you tell yourself you can live slightly less well-off in retirement on $80,000 a year. You’ll be able to collect about $20,000 or so a year from Social Security benefits (if it’s still around), that means the remaining $60,000 will have to come from your nest egg. If you withdraw 4% a year from savings that means you’ll need a retirement portfolio of roughly $1.5 million.

And you can expect that number to jump even higher each year because of inflation. When calculating the magic number you’ll need to retire always expect the unexpected. Is there a chance you’ll need to help your aging parents out or your children out with their bills? Any unexpected expenses like this can take big chunks out of your nest egg. Your best bet is always to save more than you think you need and try to take into account every possibility.

Myth #3: Saving For College Is More Important Than Retirement

All parents want to give their children the best life possible. And for many that includes paying for their child’s college education. It’s only natural for parents to believe that saving for college is more important that a far more distant retirement.

The problem with that line of thinking is that while your kids may earn more in their lifetime because they have a college degree and therefore lead a better life you may not. What good will you be to your college grad if you have to spend your golden years sleeping on their couch?

Your children can get loans and scholarships to pay for schooling. There are no loans or grants to apply for to be able to retire.

Now I’m not saying you should give up entirely on paying for your child’s college education. Paying for your child’s college education is not an all or nothing type deal. Help to the extent you can, but do not let it derail your saving for your retirement. In the future if all goes well, you can consider helping to pay off any of their remaining student loans.

Myth #4: You Must Move To a Less Expensive Area

Almost as predictable as the Lakers making the playoffs each year or the Yankees being a contender postseason is that retirees will want to trade in the dreary, cold winters for a sun drenched place to rest their bones at. That’s why places like Florida, Texas, Arizona and South Carolina have become Mecca’s for our aging population.

Financial planners have been touting these places for decades. They combine great year round weather and cheaper housing with low to non-existent income taxes. Most retirees see this as a way to lower their overall spending.

However what many retirees fail to take into account is the give and take that moving to another area of the country will have on their overall expenses. Many fail to take into consideration that their travel expenses will increase. Traveling back and forth to see friends and family will eat up some of that money you are saving. So will the higher sales tax and property tax rates that most Sun Belt cities have.

Myth #5: Medicare covers everything

Maybe the biggest myth of all is what Medicare covers and falls short on. Most people mistakenly believe that Medicare covers all heath care costs. Not true. Medicare was designed to pay for major health care needs, not routine care like dental visits or eye care or some prescription medication.

Medicare co-pays can range from 20 to 45 percent of the cost of many types of outpatient medical care. These gaps and co-pays are rarely taken into consideration when saving for retirement. Medicare gap insurance can cost upwards of $200 a month.

These costs can quickly chip away at even the most diligent savers nest egg.

It’s very hard to accurately predict how any of us will live in retirement. It’s even harder to plan for it when many of the things we’ve been told about it are based on lies and faulty information.

We here at League of Power are eternally committed to exposing the lies of Wall Street, the financial industry and the government so you can live the best life possible.

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Keeping Money In Your Pocket,

Nancy Patterson