For those not there yet, retirement is a time of life veiled in excitement but with perhaps a tinge of fear and uncertainty thrown in. Will I make an easy transition from the workplace? How will I spend my time? What can I afford to do?
Several myths and misconceptions have arisen over retirement, particularly over the financial aspects. Here are some common assumptions that don’t always stand up to scrutiny.
Myth #1: People who continue to work later in life do so because they’re forced to.
Actually, results from a survey by Fidelity Investments released last month found that people still employed later in life often do so voluntarily. Some 61% of older workers indicated that they like their work, and 48% said a job makes them feel valued, according to the poll, which elicited responses from more than 12,000 people.
That said, the survey also found that a solid majority of people, once retired, said they’re generally satisfied with their situation. Some 85% of respondents said retirement is the most rewarding time of their lives, and nearly the same percentage indicated that they retired at the right time and have found that it’s easier than they thought to live comfortably.
Myth #2: Social Security recipients will lose benefits if they continue to earn money on the job.
This issue is an occasional source of confusion. Yes, some Social Security recipients might lose benefits, but others won’t. And even in cases where benefits are withheld, they usually aren’t truly lost.
Social Security recipients do face an annual limit on work-related earnings, which for 2015 is $1,310 per month or $15,720 for the year. That amount gradually will rise in subsequent years. If you collect Social Security retirement benefits before full retirement age, your benefits are reduced $1 for every $2 you earn over the limit. In the year you reach full retirement age, $1 gets deducted for every $3 above a higher limit. Full retirement age is between 66 and 67 for most people currently in the workplace.
As noted, if you’re above full retirement age, there’s no need to worry. “Starting with the month you reach full retirement age, we will not reduce your benefits no matter how much you earn,” states the Social Security Administration.