3 Retirement Myths Costing You Money
Written by
Choncé Maddox
Edited by
Levi Leidy
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When it comes to retirement planning, most people have heard some variation of “you’ve got plenty of time,” “the market is risky” or “small contributions don’t really matter.” On the surface, these statements might sound harmless or even logical, but in reality, they’re some of the most damaging money myths out there. They can quietly eat away at your long-term security and make it harder to reach the comfortable retirement you’ve imagined.
Fidelity recently outlined several common money myths that can get in the way of smart financial decisions. Here are three retirement-specific myths that could be costing you real money, plus what to do instead to keep your nest egg on track.
Myth 1: ‘I’m Young, So I Don’t Need To Save for Retirement Now’
It’s easy to think that retirement is something to worry about later, especially when you’re still early in your career. But time is one of the most valuable resources you’ll ever have, thanks to the power of compound growth. Every dollar you invest in your 20s and 30s has decades to grow, meaning small contributions can multiply significantly.
Waiting even five or 10 years to start saving means you’ll have to contribute much more aggressively later on to make up the difference. You could also miss out on valuable employer matching contributions, essentially free money, that could have been working for you all along.
The best move you can make right now is to start saving, even if it’s just a small amount. If your workplace offers a 401(k) match, contribute at least enough to get the full match. That’s one of the easiest ways to build momentum.
Set your contributions to automatically increase by 1% each year or whenever you get a raise, so saving more becomes effortless. If you don’t have access to a 401(k), open an individual retirement account (IRA) and start with what you can. The key is just to begin, because the earlier you do, the more time your money has to grow for you.
Myth 2: ‘The Stock Market Is Too Risky for My Retirement Money’
It’s understandable that many people see the stock market as unpredictable or intimidating, especially after experiencing market downturns or hearing stories of losses. But over the long run, avoiding the market altogether can actually carry its own risks.
Retirement is typically a long-term goal, and money that isn’t invested often struggles to keep up with inflation. While savings accounts or certificates of deposit (CDs) may feel safer, their returns rarely match the growth potential of a diversified investment portfolio.
Investing doesn’t have to mean taking on unnecessary risk. Many long-term investors manage volatility by spreading their money across different types of investments such as stocks, bonds and cash equivalents rather than putting all their savings in one place. This approach, known as diversification, helps balance potential losses in one area with gains in another. Some also adjust their mix of investments as they get older, gradually shifting toward more conservative holdings as retirement nears.
Others find comfort in using professionally managed options, like balanced funds or target-date funds, which automatically adjust the level of risk over time. These strategies can help smooth out the market’s ups and downs while still allowing for the kind of growth needed to fund decades of retirement.
Myth 3: ‘It’s Not Worth Saving If I Can Only Contribute a Small Amount’
This myth keeps countless people from ever getting started. It’s easy to believe that saving $20 or $50 a month won’t make a difference, but small, consistent contributions can add up to tens of thousands of dollars over time. Compound growth works its magic on every dollar, no matter how small, and the habit of saving regularly is even more valuable than the amount itself.
Waiting for “the right time” or “extra money” often means years slip by without any progress toward your retirement goals. If you can’t contribute much today, start with what you can and commit to increasing your savings as your income grows. Maybe you start by contributing 2% of your paycheck and gradually work up to 10% or 15% over the years.
Setting automatic transfers to your retirement account or using micro-savings tools that round up purchases and invest the difference can help you save without even thinking about it. The key is consistency. The earlier and more regularly you invest, the easier it becomes to build meaningful wealth over time.
Don’t Let These Common Misconceptions Lead Your Finances
These three myths are more costly than they appear. They often reinforce one another, creating a cycle of delay and missed opportunity. The good news is that each one has a simple fix. Start where you are, invest consistently and give your money time to grow.
Whether you’re at the beginning of your career or nearing retirement, there’s always something you can do today to strengthen your financial future. The earlier you confront these myths and replace them with action, the more likely you are to enjoy the freedom and peace of mind that come with a well-funded retirement.
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