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Ahh…retirement. Get smart about common retirement rules that may be more myth than reality and set yourself up for long-term retirement success.

Ahh…retirement. While your plans for retirement may range from relaxation to traveling the world or even pursuing a new career, one thing is true: there’s no one-size-fits-all plan when preparing for retirement. Get smart about common retirement rules that may be more myth than reality and set yourself up for long-term retirement success.

Myth No. 1: Save 10% and you’ll be just fine.

Don’t get us wrong, saving 10% of your current pay is a great start, but it may not be enough to create a comfortable cushion in retirement. In this case, age DOES matter. Saving takes time, and if you’re nearing retirement and have just started to build a nest egg, put aside whatever you can manage. Now is a great time to connect with a financial advisor to help you create a plan to meet your savings goals.

Myth No. 2: 100 – your age = percentage of stocks in your portfolio.

If you’re 40 years old, for example, this rule recommends keeping 60 percent of your portfolio in stocks for a progressively more conservative investment strategy. As a rule of thumb, this is a great way to get started, but it doesn’t account for the possible variations in personal investment strategies and retirement goals. Instead, consider creating an asset allocation—and be willing to adjust it more than once a year—that matches the amount of risk you’re comfortable with, the amount of time you plan to invest, and your financial goals. As a reminder, asset allocation does not ensure a profit or protect against a loss—investing involves risk, including the potential loss of your principal.

Myth No. 3: Plan to spend 30% less in retirement.

In general, your expenses in retirement are 70% of your pre-retirement expenses, which is a good starting point to estimate your post-retirement spending needs. Keep in mind that sometimes your expenses will fluctuate—while your wardrobe expenses will likely go down, your healthcare costs may increase, and some expenses, like groceries, will stay the same.

Myth No. 4 Withdrawing 4% of your investments each year will sustain you throughout retirement.

Determining how much money you can safely withdraw from your savings and investments in retirement is an important calculation. Some experts suggest withdrawing a smaller percentage each year, while others recommend rate changes based on how your investments perform. No one can predict how much money you’ll need to sustain a comfortable retirement—only time will tell.

Myth No. 5 You can always count on Social Security.

Social Security is not designed to replace pre-retirement income, so it’s best to view it as a helping hand and not as a central source of funding. As our life expectancy increases, so do our health care costs, so plan on covering these types of expenses using 401(k) funds and other forms of savings.

The only rule that matters: stay flexible

If it’s not clear by now, there’s only one rule you can successfully follow in retirement and that’s to stay flexible. Have a plan to follow and be prepared to reassess and modify it as time goes by. Meet with a Verve financial advisor today.


It’s Verve’s goal—in line with our guiding 7 Cooperative Principles—to provide education, training and information to help our members plan for the future and stay fit financially. We’re committed to keeping our members educated when it comes to their finances by providing tips on ways to plan for retirement.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

Social Security Consultants and its representatives are no affiliated with LPL Financial.

This material has been prepared by LPL Financial. A registered investment advisor, member FINRA/SIPC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial is not an affiliate of and makes no representation with respect to such entity.

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