6 Self-Deceptions that Can Ruin Your Retirement

Don't expect a former employer or your children to finance your retirement.

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When you create a retirement plan, honesty and reality are the best policies. But sometimes we deceive ourselves by thinking that we will save more money for retirement when we are older or that our children or a former employer will take care of us in retirement. Here are six retirement planning misconceptions that could destroy your chances of a comfortable retirement.

[See 10 Costs That Could Increase in Retirement.]

1. I’m young. I’ve got plenty of time to save for retirement. You may think you have time to spare, but your health or your employer could have different ideas. You may have a lot of time left, but most of that could be after you stop working.

2. The stock market will come back big time. Lots of investors have fond memories of stock values skyrocketing during the dot-com years, even for companies that had never turned a profit. But it could be many years until we see the market return even to 2007 levels. Plus, telling yourself that a strong bull market will save your retirement may cause you to take on too much investment risk. If there is a double-dip recession, where will that leave you?

[See 7 Questions to Ask Experienced Retirees.]

3. A life of leisure means a happy retirement. Free time is nice. But an endless supply of it with no place to go can mean boredom and depression. You need a plan to fill that free time with rewarding activities.

4. My cost of living will go down in retirement. This may be true, if you are healthy and if your retirement plan can handle inflation. Those are big ifs to prepare for.

5. The government will take care of me. Medicare and Social Security are being attacked economically and politically. The government could introduce benefit means testing or tax increases that could result in smaller payments for some retirees.

[Bookmark the U.S. News Retirement site for more planning ideas and advice.]

6. My kids will take care of me. Really? Have you asked them? The next generation is already burdened with years of repayment of massive government deficits. What makes you think they will have any resources to spare for you?

Mark Patterson is an engineer, patent attorney, baby boomer, and author of The Failsafe Retirement System. He blogs on matters of personal finance and retirement planning at Tough Money Love and Go To Retirement.