5 Retirement Myths to Leave Behind (and How to Start Planning for the Reality)

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Many people take the first months of the year to prioritize their financial goals, and for some, that includes retirement planning.

Yet studies find that it can also be one of the most uncertain stages of life. According to the 2025 Retirement Confidence Survey by the Employee Benefit Research Institute, only 25% of American workers feel very confident about their ability to afford a comfortable retirement.

When meeting with clients, I've noticed that individuals farther from retirement often share similar misconceptions about how they'll achieve their desired level of financial stability post-career.

Among those closer to retirement, I also see a similar misconception of their expected lifestyle and financial situation when retirement settles in.

Separating fact from fiction is a critical first step toward building a retirement plan that's grounded in reality — not assumptions. Below, I've highlighted common myths to help identify the truth around retirement planning.

Myth No. 1: 'I'll need less money in retirement'

A common assumption I hear when first planning for retirement is that you'll spend far less once you stop working, due to factors such as reduced commuting costs, financially independent children or a paid mortgage.

However, in my experience working with retirees, while spending patterns might shift, expenses rarely disappear, especially during the early "go-go" years of retirement, when travel, hobbies and fulfilling lifelong dreams take center stage.

Clients also often underestimate expenses that arise during retirement. A large percentage of those expenses could result from exciting lifestyle changes, such as increased travel. There's also a high possibility of practical costs, including health care, that accumulate over time.

If people retire before Medicare age, for instance, they'll be left to deal with private health care, which can be very costly.

When retirees or soon-to-be retirees come to me for advice after underestimating the expenses they'll incur, it's often because they overshoot their projections of what they planned to spend.

That's why I encourage clients to have a good handle on potential increased expenses to avoid having to rework their retirement budget.

To do that, start with what you spend now, map out what might arise in early retirement and add a buffer for some fun and for the costs you might not see coming.

Myth No. 2: 'Social Security will cover most of my needs'

If Congress takes no action, Social Security trust fund reserves are projected to be depleted around 2033, according to the SSA's 2025 Trustees Report. That would result in an automatic cut of about 23% in benefits from incoming revenue to cover the shortfall, affecting millions of retirees unless legislative action is taken.

With this in mind, I encourage those approaching retirement within the next 10 years to understand the role Social Security plays.

A vast portion of the workforce believe that Social Security will cover nearly all their retirement needs, but in truth, it only covers somewhere between 35% to 40% of pre-retirement income. While it subsidizes, it was never meant to cover all costs.

To help offset the coverage, I might suggest that my clients consider claiming their benefits later in life. If you take them at 62, you'll see a 30% permanent reduction in your monthly benefits compared with waiting until full retirement age.

Myth No. 3: 'I can rely on the market and investments to do the heavy lifting and just focus on that'

While investments might bring greater rewards, they can also entail greater risk. The goal of long-term financial planning is typically to take on more risk in your younger years, then secure your portfolio, finding an allocation that you can stomach after retirement, not the other way around.

Beyond markets and investments, I notice that estate planning is often the most overlooked aspect of the overall financial plan. Clients frequently de-prioritize their estates, focusing efforts on investments and personal financial goals.

Estate planning is crucial because it can help ensure wishes are honored on the distribution of assets, durable power of attorneys for both financial and health care and potentially the care of loved ones through a special-needs trust, while potentially minimizing taxes and legal burdens.

I suggest reviewing estate plans annually and making changes as needs shift and as market conditions evolve.

When considering investments and estate planning, it's essential to view retirement planning from a holistic perspective rather than as a series of individual components. Each moving piece works in tandem with the others.

Because this process is ever-changing, your career, health and family circumstances might look very different even a few years from now. By taking a lifelong approach to retirement planning, you can adapt to both life's changes and the market's ebbs and flows.

Myth No. 4: 'I'll work forever — or at least for as long as I want'

Many of my clients come to me with a complete road map for when and how they want to retire. But "want" is the key word.

According to a Transamerica survey, nearly 60% of people reported retiring earlier than planned in 2024 due to unexpected health and life events.

To protect clients in case they're forced to retire outside their planned timeframe, I suggest proactive planning.

By planning and saving on the front end, having a financial planner who can provide perspective on the what-ifs and help solidify a portfolio and assets early, can help you mitigate the risk of not being prepared if you need to retire sooner, or later, than planned.

Myth No. 5: 'My taxes won't be that high'

Many of our high-income clients assume their tax burdens will automatically be lower in retirement because they expect their incomes to drop significantly after leaving the workforce, moving them into a lower tax bracket.

But we've seen income tax brackets remain the same or even increase, depending on future tax policy and the structure of retirement income.

Large balances in tax-deferred accounts can create significant taxable income once required minimum distributions (RMDs) begin.

That's why we often recommend being strategic about when and how you draw down assets, including tapping taxable or tax-advantaged investment accounts earlier, to help manage lifetime tax exposure and avoid unexpected tax surprises later in retirement.

Conclusion

If there's one takeaway you should remember, it's this: Retirement planning is most powerful when it starts early. It's not something reserved for the final few years before you stop working; every early step you take gives you more flexibility, confidence and choices later on.

Even small actions today, such as consistently saving and understanding where your dollars are going (Roth vs traditional accounts), can make a meaningful difference over time.

Working with a financial adviser can help further turn uncertainty into clarity. An adviser brings an objective perspective, helps challenge assumptions people often make on their own and prepares you for the unexpected, not just the ideal scenario.

For couples, that guidance can be especially valuable, ensuring both partners are aligned and informed, and providing trusted support should life take an unexpected turn.

Ultimately, separating retirement myths from reality isn't about fear or perfection; it's about having a clear plan, a shared understanding and the confidence to move forward into the next chapter of your life.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.