Here are two common misconceptions to think about:

1) Assuming retirement will last 10 to 15 years. 

Historically, retirement has lasted about 10 to 15 years for most Americans. The key word here is “historically.” When Social Security was created in 1933, the average American could anticipate living to age 58 as a man or 62 as a woman. By 2014, reports indicated life expectancy for the average American had increased to 78.8.

So assuming you’ll only need 10 of 15 years worth of retirement money could be a big mistake.

In 2014, the Centers for Disease Control and Prevention’s National Center for Health Statistics said the average 65-year-old American male can expect to live to nearly 83. The average 65-year-old American female has an average life expectancy of 85.5.

 

2) Assuming too little risk.

Holding onto your retirement money is certainly important; so is your retirement income and quality of life. Over the last few decades,we have had moderate inflation — and sometimes worse. (Think 1980). What happens is that over time, even 3 to 4 percent inflation gradually saps your purchasing power. Your dollar buys less and less. If your income doesn’t keep up with inflation, essentially you end up living on yesterday’s money.

As you retire, you may assume that an extremely conservative approach to investing is mandatory. But given how long we may life — and how long retirement may last — growth investing may be important.

 

Troy Irvine is the vice president of wealth management at Alliance Benefit Group. He can be reached at 507-369-9999 or tirvine@investorscapital.com.