There are 2,728 rules for filing Social Security
There are important decisions you need to make when claiming Social Security, and you want to understand the facts so you don’t make a costly mistake.
By Karlan Tucker
If something you thought to be true turned out to be exactly the opposite, how soon would you want to know about the actual truth? It was once believed that the world was flat, and that the earth was the center of our solar system. It was also believed that atoms were the smallest particles in existence. These once-held truths are hardly given a second thought today. Our “new” way of thinking is the result of many years of advanced discoveries and facts being passed from generation to generation. But imagine how hard it must have been to grapple with the idea that one could actually sail around the earth rather than falling off the edge of it. People were mocked, ridiculed, and even persecuted for an idea so preposterous as the sun being the center of the solar system instead of the earth.
Fast-forward several hundred years. Although it now seems almost laughable to reflect on this way of thinking, we must not forget the human process of wrestling with truth, particularly when it goes against what we have been taught for much of our lives. Decisions become exponentially harder to make when they go against ingrained thought patterns.
Investing is no exception to this rule. When it comes to choosing our investments, the same mental challenges are present that were there hundreds of years ago. When choosing the best vehicles to invest our retirement funds, what we have been taught may or may not be true. We owe it to ourselves to perform the proper due diligence and consider the best place to invest our money in this ever-changing economic environment. Below are three suggestions that will help serve as catalysts to begin this process:
The difference between what we believe will happen and what actually happens can be quite astonishing. This goes for nearly every facet of life, including retirement. Before you retire, there are certain expectations that you might have concerning your quality of life, finances, health, etc. Once you get there, however, you may find that your expectations do not exactly align with reality.
The Harvard School of Public Health, in association with the Robert Wood Johnson Foundation and NPR, set out to measure the differences between the expectations and realities of retirement. What they found, which is summarized in this video, might surprise you.
QUALITY OF LIFE
The first thing that the survey looked at was a person’s overall lifestyle. Basically, it was a measurement that was just as it sounds: how a person who is planning to retire feels that their overall life will be, and then how it actually ends up for those who are already retired. For those who are planning to retire, only 14% believed that their overall quality of life would be worse once they reached retirement. However, of those surveyed who were already retired, 25% stated that their overall quality of life was worse than before.
It is a fact of life that as we get older, our bodies begin to break down faster than ever. We are more susceptible to illness and injury. Despite these facts, only 13% of people who took part in the survey and were planning to retire believed that their health would worsen in their later years. The reality according to those who had already retired, however, was that a whopping 39% had worse health issues than before they retired. This is not a very hopeful scenario.
Making sure that you maintain your finances throughout your retirement can be a harrowing ordeal, one that many people have difficulty achieving. It’s often difficult to keep the money coming in, unless you’re working at least part-time in your later years. Even so, a rather shocking 22% of those who were not yet retired expected their finances to decrease. In reality, 35% of participants who were already retired claimed that their financial outlook went down after retirement.
This part of the survey was possibly the most shocking. Out of the participants who were still waiting for retirement, a miniscule 1% expected a detriment to their ability to exercise. But on the other side of the retirement line, 34% stated that their exercise capabilities lessened. That difference is incredible, to say the least.
Millions of Americans love to travel. Whether it’s taking a road trip across the country or flying halfway across the globe to an exotic location, many of us simply love to get out and explore the world that’s surrounding us. Perhaps that’s why only 11% of those surveyed who were planning to retire predict that their travel would lessen. But for the ones surveyed who were already retired, 34% reported that they were not able to travel as much as they had before retirement.
As you can see, there is often a huge difference between our expectations regarding retirement, and the reality of that retirement. We tend to think that everything will remain the same, even as we get older. But it’s important to recognize the difference between blind expectations and reality, so that we can prepare for life’s little inconveniences. With measured goals and a clear plan, retirement can happen “on purpose”, rather than by luck.