Friday, November 17, 2006

Retirement Myths

Most of the retirement planning people provide advice like:

-You need 70% of your pre-retirement income in retirement to keep the same standard of living
-You are going to live longer, so plan to live to 100 years old.
-You can't count on government pensions

All of the above is bullsh!t.

If you are following my previous post guideline of the 30-30-40 budget, you need exactly 40% of your pre-retirement net income to keep the same standard of living. After all your house should be paid for so you don't need 30% and if you are not saving for retirement you don't need another 30% of your net income.

Check out the government's average life expectancy (~75 for males and ~81 females) and you will be a bit overly optimistic to assume that you medical science will keep you alive for another 20 to 25 years.

The entire myth about the CPP running out of money is a bit of carry over myth from the US where social security is on rocky ground. We have been assured that the CPP fund has enough money to keep going.

So remember to take any 'advice' from someone selling you a mutual fund or other product with a grain of salt. After all they are just trying to earn a living by making you work longer than you need.

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