3 Things Americans Get Wrong About Retirement

Do you know when you’re going to retire, how much you’ll have in income, or what you’ll spend your money on? Chances are good that, even if you think you know the answers to these questions, you’re probably not correct.

Americans have a lot of expectations about retirement, but a lot of those expectations don’t pan out. In fact, here are three really big things Americans often get wrong about retirement.

Binder labeled retirement savings plan with a calculator on top of it
Image source: Getty Images.

1. The age at which they’ll retire

Most Americans think they’ll work well into their 60s. Most pre-retirees responding to a Nationwide survey said they’d work until 65, while almost four in 10 Americans responding to a Willis Towers Watson survey said they’d work into their 70s.

The reality is, many Americans will be forced out of the workplace much earlier because of physical problems or an inability to find a job. Around 64% of workers said they’ve been victimized by age discrimination or seen it at work, and an analysis from Schwartz Center for Economic Policy Analysis revealed a real unemployment rate for those 55 or older at 2.5 times the national jobless rate.

Statistics like these explain why 62 is the most popular age to claim retirement benefits, despite most Americans indicating they’ll work much longer.

If you’re forced out of work early, this has a profound impact on your financial security. You’ll begin drawing from savings sooner — assuming you have any — and could run out of money faster. You’ll also have fewer years to save, and Social Security benefits will be reduced if you must claim them early.

Unfortunately, there’s no way to predict if you’ll have to stop work before you’re ready. The best thing to do is to invest as much as possible as early as possible to build a nest egg to support you if you’re forced into early retirement. And, if health issues prompt you to leave the workforce early, look into Social Security Disability rather than just relying on savings.

2. How much they’ll receive in Social Security income

Social Security is designed to replace only around 40% of pre-retirement income, while 53% of future retirees and 59% of recent retirees responding to Nationwide expect benefits to cover at least half of expenses.

Most people overestimate what Social Security will do for them because they think their benefits will be bigger than they are. Most future retirees expect they’ll receive $1,578 in Social Security benefits, which is more than the average monthly benefits received by current retirees.

Many people are way off when estimating benefits. According to the American Enterprise Institute, a third…

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