5 Financial Wellness Myths Surrounding Near Retirees

When people think of retirement, they often have an image formulated in their minds of what it will be like. The thing about it, the reality might not be what they expected. The internet is full of retirement information; however, not all of it is accurate. Some of it is pure myth. To avoid any surprises, here are five financial wellness myths we want to bust surrounding near-retirees.

Myth #1: No more taxes

You may think you are no longer subject to taxes once you retire. That couldn’t be further from the truth. Some of these retirement taxes include:

  • Social Security gets taxed based on your income and primarily affects higher-net-worth individuals.
  • Required Minimum Distributions (RMDs) are taxed if you are age 73.
  • Capital Gains tax is required on investment profits if your income is $44,626 or more.
  • Gift taxes are required for gifts exceeding $17,000 per person, $34,000 per person, per married couple.
  • Lifetime exclusion gift taxes become a factor if your gifts exceed $12.92 million per individual.

Myth #2: Social Security will cover your expenses

Some retirees believe Social Security benefits will be sufficient to cover their retirement expenses, although this may be a risky strategy and lead to long-term financial challenges. Over time, housing, healthcare, food, entertainment, and other retirement expenses can experience a decrease in purchasing power while the cost of living continues to rise. This can be difficult if you try to maintain a specific lifestyle on a fixed income like Social Security.

Myth #3: Nobody works after they retire

What are you going to do after you stop working to keep yourself busy? Some plan to keep working. According to the U.S. Bureau of Labor Statistics, among adults ages 65 to 74, workforce participation is expected to grow to as much as 30.7% by 2031. The 75-and-older crowd is expected to be around 11.1%. Each of these retirees will have their own reason for continuing to work. Some may depend on an income to live comfortably, others need it to survive, and some are just working to stay busy and give themselves something to do and keep their minds sharp. As the planning director at Creative Financial Concepts in New York put it, “Boredom is a huge problem.” Having a job to do every day gives people a reason to get up in the morning. Many retirees miss that.

Myth #4: It is too risky to invest in the stock market

Some retirees feel that investing in the stock market may be too risky. However, there are investment strategies for retirees with a lower risk tolerance. One way is through diversification, for example, purchasing treasury bills, bonds, municipal bonds, annuities, mutual funds, and life insurance. A financial professional can help you manage your portfolio so you are diversified and can work to make the market work for you.

Myth #5: Retirement planning is easy, and I can do it myself

Retirement planning is not easy and as many of you have learned over the years, there are many moving parts that are frequently evolving with a constantly changing world, from tax rules to interest rates, cost of living, to your short and long-term goals. Getting the help you need from a financial professional can be beneficial in so many ways.


Schedule that appointment with your financial professional today!


1 in 6 retirees are considering a return to the workforce (cnbc.com)

2022-2023 Long-Term Capital Gains Tax Rates | Bankrate

KA-02471 · FAQ | SSA

Gift Tax: How It Works, Who Pays and Rates – NerdWallet

9 Reasons People in “Blue Zones” Live Longer, Healthier Lives | Houston Methodist On Health

6 Low-Risk Investments With High Returns for Retirees | Investing | U.S. News (usnews.com)

Taxes in Retirement: How to Reduce Taxes on Your Withdrawals (ml.com)

Retirement Reality Check: Debunking the Top 8 Retirement Myths – IFW (the-ifw.com)

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by LPL Marketing Solutions

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