Debunking 11 Common Myths About Retirement Planning

Welcome back to Fuchs Around & Cal Them Out. Today we’re going through the thing that’s in our title: Retirement Myths. I am your host, Ben Fuchs, here with my co-host, Alex Cal—let’s dig in. We’re going to run through a few retirement myths. Myth #1: “My expenses will drop in retirement.” Usually not the case. Now that you have more free time, hobbies and travel tend to increase spending. You no longer have an eight-hour workday (plus commute) filling the schedule, so you find more things to do—and spend on. From my perspective, I want retirees to have structure and purpose, because we’ve seen people retire and fade quickly. Having something consistent to do helps. I remember a couple from my old firm: he was 74 and still working a hands-on job; she was 68 and had retired five years earlier. He looked years younger—momentum and routine mattered. Often if one spouse retires, the other follows within a year or two (unless they really don’t want to be home together, which… happens). Myth #2: “Social Security will cover all or most of my needs.” Maybe in some parts of the country, but not for most people we see, especially in Connecticut. Our clients are good savers and want to enjoy spending some of what they saved—sometimes we have to cajole them to spend, and once they start it can snowball. Social Security typically replaces ~30–40% of pre-retirement income; it rarely covers “most” expenses. We’ve seen cases where a $2,000 monthly benefit didn’t cover property taxes and Medicare premiums. People underestimate lifestyle costs because they’ve never built a real budget—they just see a paycheck every two weeks. Property taxes, Medicare, and normal living costs add up. Myth #3: “Medicare pays for everything.” Medicare works like other insurances you’re used to: in-network vs. out-of-network, deductibles, coinsurance. Original Medicare often pays 80% and you pay 20% unless you use an Advantage plan or a supplement; there are still copays and costs. Dental, vision, and hearing often aren’t included with Original Medicare. From a planning angle, I think in terms of the maximum out-of-pocket per person per year and make sure we have a plan to fund that—just like treating it as a deductible in the financial plan. Myth #4: “I can always work longer to make up the difference.” Reality: many can’t. People get laid off, pushed out, or need to care for family (the sandwich generation caring for adult kids and aging parents), or their health prevents them from doing the job. I’ve seen mainframe experts who thought they were indispensable get outsourced at 59–61—right when they needed 3–6 more years. Big companies often cut the highest-paid roles first; loyalty doesn’t always factor into the spreadsheet. Sometimes that backfires on companies, but it still happens. Myth #5: “The 4% rule is always safe.” Studies disagree. If you start withdrawals after a big drawdown, your initial 4% could effectively be much higher and not sustainable. If $1,000,000 in tech stocks drops 40% to $600,000, taking $40,000 is 6.7%—very different risk. We’ve had decades with multiple major shocks (dot-com, Great Recession) where fixed rules failed. It should be case by case: some can take 3%, others 6%, depending on how income is generated, risk tolerance, buffers, and goals. Some years you’ll take more (Disney with the grandkids, a long cruise), other years less; rigid rules put people in a box. Myth #6: “Financial planning is only for wealthy people.” We do a lot for high-net-worth clients (especially taxes), but lower-income or lower-need households can unlock massive tax advantages with timing and account selection. Both wealthy and not-wealthy clients often say “just send the money” without considering the tax path—planning can save tens of thousands depending on when and where withdrawals come from. Myth #7: “Once I have a plan, I’m done.” Strongly no. Tax laws, markets, interest rates, personal goals, family situations, and estate rules change. A plan from 10 or 15 years ago may be outdated. When rates were 10–15% (early 80s), living on CD interest made sense; at 1–3% it didn’t. Many still sit in CDs out of habit even when better options with similar risk and liquidity exist. You need ongoing updates across taxes, investments, and estate planning as your situation evolves. Myth #8: “My kids will manage their inheritance wisely.” Statistics suggest otherwise—large inheritances often disappear quickly. The average inheritance is gone in about nine months; for $5M+, roughly ~70% is gone by the second generation and >90% by the third. The antidote is education and values—start family money conversations around ages 7–12, depending on maturity. Schools don’t know your family philosophy; parents need to teach saving, earning, and appreciation. If heirs don’t understand the story behind the wealth—decades of saving and sacrifice—they’re more likely to treat it like lottery winnings. Lightning round myths: “I’m too young to start planning.” Never too young—compound growth matters. “Investment management is financial planning.” No—owning a 401(k) is not a plan; you still need a withdrawal, tax, and risk strategy. “Savings only need to last to age 80.” Not with today’s longevity and medical advances. We hope you enjoyed the show; please like and follow the podcast. I’m Ben Fuchs. I’m Alex Cal. See you next time. This transcript was generated automatically and may contain minor errors.