To this day, it never ceases to amaze me how so many intelligent people take advice from people who are totally unqualified to give it.

For example, when I conduct retirement and investment seminars, it’s not uncommon for me to hear statements like this:

“My sister’s, ex-husband’s, brother-in-law’s, former neighbor who used to live next to an accountant said I should do this…”

Or

“I read an article in a financial magazine that says all retirees should do that…”

My dear readers…STOP THE MADNESS!!

Here are some of the more common myths perpetuated in society by the media and a dose of reality.

Retirement Myth #1:  You’ll need 70-80 percent of your pre-retirement income to live comfortably in retirement.

Retirement Reality Check:  The income needed by you to live comfortably in retirement could be a lot more or less.  Some of my private clients live on 70-80 percent of their pre-retirement income. Some live on 60-70 percent or 90-100 percent. Some live on 100 percent of their pre-retirement income because they’re traveling more, dining out more, completing home renovations, and/or their medical costs have increased. It all depends upon your goals.

Retirement Myth #2:  You should make your investment portfolio more defensive when you retire.

Retirement Reality Check:  If your portfolio was set up correctly from the get-go, why would you have to change just because you stopped working? Your situation and attitude will change over time.  When it does, you have the option of changing your investment strategy.  Retirement may be a time to get more defensive but it doesn’t have to be.

Retirement Myth #3:  Your investment portfolio performance has to beat the S&P 500.

Retirement Reality Check:  Why does it have to beat the S&P? Who cares? Listen, benchmarking your returns to a traditional index changes the target away from your goals, to an external measure that you have no control over, and has no real relevance to your goals. Instead, benchmark your progress toward the accomplishment of your life goals. That is, what return do you require to prevent yourself from running out of money given the lifestyle you desire? This clearly puts the emphasis on areas you have control over such as reducing risk, minimizing taxes, minimizing investment fees and proper beneficiary planning.

Retirement Myth #4:  You can rely on the equity in your home to retire secure.

Retirement Reality Check:  Don’t bank on it.  Sometimes you can.  Sometimes you can’t.  Talk with people in Vegas, California and Florida who bought during the recent housing boom at the peak of the market and who are now stuck with big mortgages and negative equity.  Real estate doesn’t always go up and often times will go down in value.  Real estate is a great way to build wealth over time.  The long-term trend is positive.  But if you’re basing your retirement success on a short-term “flipping” strategy or “interest-only loans”, hoping to see a run up in prices, you may be kidding yourself.

Retirement Myth #5:  I’ll continue working until my late 60’s or early 70’s.

Retirement Reality Check:  Sure it’s possible, but 40 percent of us will be forced out of the workforce due to corporate restructuring, a medical issue, or a family medical issue.  I see this all the time.  While working into your late 60’s is possible and great in theory, it doesn’t happen too often.  Besides, do you really want to work that long?  It’s a great planning idea if you love your work or you’re short on savings, but if you’re like most baby boomers I work with, you’re tired and burnt and want more free time.

Retirement Myth #6:  I don’t need to save.  I’m gonna receive a large inheritance.

Retirement Reality Check:  Don’t count on it.  Years ago many financial services firms were saying that the biggest transfer of wealth would be passed down to the next generation.  Guess what?  It hasn’t materialized.  People are living longer and need the money to survive. 

Additionally, medical costs are skyrocketing so there isn’t much left over.

Retirement Myth #7:  I can live on Social Security.

Retirement Reality Check:  Social Security wasn’t meant to be the sole source of your retirement income.  If you’re lucky, it may provide 1/3 of your desired income in retirement.  You’ll either need to work longer, reduce your standard of living, or save more.

Bill Losey, CFP® is the author of “Retire in a Weekend! The Baby Boomer’s Guide to Making Work Optional.”  He also publishes Retirement Intelligence®, a free weekly award-winning newsletter.  Bill owns and operates Bill Losey Retirement Solutions, LLC, an independent registered investment advisory firm in Wilton.  He can be reached at www.MyRetirementSuccess.com.