9 Lies You’ve Been Told About Saving for Retirement

Saving for retirement is no picnic. You need to be disciplined and focused on the future if you hope to save enough money to see you through your golden years. You also need to be able to separate the truths about retirement saving from the lies.

Evidence suggests Americans are failing on all of the above counts. The average American family has just $5,000 set aside for retirement, and 43% of working-age Americans don’t have any retirement savings, according to an analysis by the Economic Policy Institute. Seventy percent of families have less than $50,000 in their 401(k). And lest you think younger workers with little in savings are skewing the numbers, consider this: Among households with members approaching retirement, the median savings balance is just $17,000. That’s hardly enough to buy a used car, let alone fund decades-long retirement.

Why aren’t Americans saving more? Many just don’t have the money. But a confusing retirement landscape doesn’t help. People aren’t clear how much they need to save, what they should do with the money they set aside, and how long they can expect to live once they stop working. Rather than carefully planning for the future, they make decisions almost at random, sometimes relying on myths, misinformation, and outright lies. Swallowing those retirement whoppers hook, line, and sinker can cause people to make critical errors today that jeopardize their financial security down the road.

From myths about the market to Social Security hogwash, here are nine of the biggest lies you’ll hear about saving for retirement.

1. You have plenty of time

Retirement may be decades away, but that doesn’t mean you can afford to put off saving. When you start saving early for retirement, you’ll have to save less money overall, since your money has more time to grow. Say you want to have a $1 million nest egg by age 65 (which may not be enough, as we’ll explain later). If you start saving at 25 and you get average returns of 7% every year, you’d need to save $381 per month, GoBankingRates calculated. If you put off saving until age 35, you’d need to set aside $820 every month to become a millionaire by 65. The chart below shows how much you’d need to invest every month to get to $1 million depending on when you start saving and the rate of return.

2. Investing your retirement savings is too risky

Millennials are scared of the stock market, and with good reason. The financial crisis of the late 2000s was frightening. Young people watched as their parent’s retirement accounts tanked in value and their home equity suddenly vanished. As a result, some younger savers are risk averse. They’re hesitant to invest their savings, preferring to squirrel away cash, which could hurt their attempts to accumulate enough money to retire. Only 33% of people between the ages of 18 and 35 are investing in the stock market, compared to half of Gen Xers and baby boomers, a Bankrate survey found. Many don’t invest because they don’t have the money, but 17% are staying out of the market because they think it’s too risky. Yet if they don’t invest more aggressively, they’ll have to save a lot more to enjoy a comfortable retirement.

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