There are a ton of articles and opinions about retirement and retirement planning out there, especially on the internet. This may surprise you, but they’re not all accurate. Plus, even if they have a semblance of accuracy, their advice may not be right for you. When planning for retirement, it’s essential that you’re able to distinguish fact from fiction to keep yourself from falling into a financial hole. Continue reading for two of the most dangerous retirement myths.

Assuming Taxes Are Lower During Retirement

Simply put, this is not usually true. Even though retirees do not receive paychecks, and therefore don’t have to worry about the taxes connected to them, doesn’t mean they’ll end up paying lower taxes. In many cases, retirees end up with a higher income, due to the absence of income tax, and jump up a tax bracket or two. Therefore, they’ll end up paying more in taxes than they did before retiring. Additionally, if you’ve invested in a 401k or another government-controlled retirement plan, you’ll start receiving taxes on these funds as soon as you make the first withdrawal.

Banking on lower taxes during retirement is incredibly risky. If you haven’t saved enough money or planned for a spike, you may be blindsided by high taxes and not have enough funds to live comfortably or the way you wanted to. Working with a financial planner to make sure your retirement portfolio is tax efficient can ensure that you’re financially prepared for retirement.

Thinking That You Have Plenty of Time

Saving for retirement is a lot like planting a tree. You have to wait years for your sapling to grow tall; the earlier in life you plant your tree, the sooner you can enjoy its cooling, dappled shade. Retirement isn’t any different. The earlier you start, the bigger it will be when you need and want it. Many individuals in their 20s and 30s believe they have plenty of time before they need to start saving. However, if you wait until your 40s to start saving, you’ll find yourself in a distressing game of catch up. Why? Because compounding does not work such a shorter timeline.

With compounding, initial retirement contributions will grow by 7% in the first year, and another 7% the year after, and so goes, continuously getting bigger and bigger. A 25-year-old who contributes around $400 a month will easily hit the $1 million mark by the time they retire. A 40-year-old who waited to start contributing to their retirement fund would have to save almost $2,000 per month. If you’ve done some quick math, you’ve probably realized this is well over what you’re allowed to contribute to 401k accounts in a year, meaning that even if this individual were able to save that much a month, they still wouldn’t be able to reach the $1 million mark by retirement.

Compounding makes retirement saving a rather passive investment. All you need to do is start as early as possible, save as much as you can, put it into a smart retirement fund, and watch your money grow as the years progress.

Though it’s not a myth, one of the most dangerous mistakes you can make surrounding retirement planning is trying to tackle it all yourself. There are a lot of personalized plans and choices that can make your finances work for you and set you up for a beyond comfortable retirement. Seeking out the help of a financial planner can help open doors and pathways you didn’t even know existed and help you avoid some common (and costly) mistakes.  

Chris Jacob is a Registered Representative with Saxony Securities, Inc.. Securities offered through Saxony Securities Inc. (SSI). Member FINRA, SIPC. Non-security products and services or tax services are not offered through SSI. Cadeau is not affiliated with SSI.