Six Lies People Tell Themselves About Retirement Planning That Could Haunt Them Later.

“Sometimes it’s necessary to get real with ourselves when it comes to planning for the future, even if the truth isn’t so appealing. – Bob Layman

Self-deception and denial are part and parcel of the human experience. There is a place in life for cheerful optimism and hope. However, when it comes to money and planning for the time when you no longer work, lying to yourself can rob you of your peace of mind.

Here are some of the most common lies I hear from people putting off retirement planning. Believing any one of these could mean trouble later.

There’s plenty of time to save for retirement.

Intuitively, we all know that the longer we put off thinking about retirement, the more challenging it will be to save. Yet, even people who are only ten years away from retiring tell themselves that time is on their side. Statistics about savings rates for Americans fifty and older prove this statement wrong every single time.

I don’t have enough left of my paycheck for saving.

In a recent survey, one out of four respondents claimed that, after paying for essentials, they didn’t have anything left to save. However, a deeper analysis of their responses revealed that that was more a case of “I don’t want to sacrifice my daily double lattes.”

When you start sooner, saving even $20 per week can add over the years. When you go over your monthly expenditures with a fine-tooth comb, I bet you will find even more money that might be more efficiently utilized.

My spouse takes care of everything, so I don’t need to plan my retirement.

Relying on a spouse to handle all your finances or build your retirement account is fraught with risk. If you believe that you can ignore planning your retirement and leave it all up to a spouse, you may want to talk with someone whose life went sideways due to a post-retirement divorce, illness, or unexpected death of a spouse. Marriage may change your money concerns, but it generally won’t make them go away, even if you meet Prince or Princess Charming.

I deserve to enjoy my earnings, so it’s okay to spend like a sailor on shore leave.

Hey, big spender! Investing for retirement does not mean that the fruits of your labor are forbidden. With some guidance from a competent and caring financial planner, you can save for later while still enjoying the NOW.

Ask your financial advisor to give you some budgeting rules of thumb, such as the “50/20/30” rule. This rule states that those still working should pay no more than 50% of their take-home pay for essentials such as housing, transportation, food, and utilities. That leaves 30% for funding your lifestyle. You should then allocate 20% for debt repayment, retirement contributions, and building an emergency fund.

Of course, everyone has unique circumstances and situations that arise, but the 50/20/30 rule gives you a place to start.

If I don’t have enough saved, I can use the equity in my home.

It’s incredible how quickly people have forgotten the economy-scorching housing meltdown of 2008-2009. When that particular bubble burst, it devoured a tremendous amount of retiree and pre-retiree wealth. And, even though it seems like the current lava-hot real estate market will never cool off, history tells us it will. If you think you can live off your home’s proceeds when you retire, what will happen if the market is down when you need to sell?

I’m frugal; I can live on Social Security.

While fears of Social Security’s total collapse may be overblown, changing demographics and a faltering economy all but ensure that the program will undergo some drastic changes in the next twenty years.

To be sure, Social Security is one of the cornerstones of a successful retirement. However, making it your only income stream is an iffy proposition. Ask anyone who’s retired and trying to live only on Social Security, and they will probably tell you that it’s rough going and that they wish they’d saved more.

The last word: Planning for life without paychecks is tricky enough, even when you don’t lie to yourself. A gut-check is in order if you want to avoid making mistakes with your finances now that will haunt you later in life.