Don't Fall for Any of These 12 Myths About Early Retirement

Is it your dream to retire early? All too often, myths about early retirement can shift the way you plan for retirement. The myths can change your decisions and negatively affect your golden years.

These decisions can swing in both directions, too. You might continue to work a job you hate so you can afford to retire on time, or you might leave your job too soon, thinking you can live only on Social Security.

Look at these 12 common myths about early retirement to help you plan for the retirement you want and need. 

Just because you retire doesn't mean you're off the hook for taxes. Some pensions are taxable on the federal level, and withdrawing from your 401(k) can increase your tax burden.

If you have other income, like from dividends or interest payments, some of your Social Security benefits may also become subject to tax. You won't keep more money in your wallet on taxes just because you retire. 

Where you live can also impact your tax burden. Some states impose income tax on retirement income, and others don't tax income at all. If you decide to move in retirement, you could end up paying more than you plan for.

Some people choose to retire because they think it's the only way to find happiness. This isn't always the case. You might have hated your job but find yourself still unhappy during retirement.

If happiness is a driving factor for wanting to retire early, consider whether having a job is really why you are miserable. Working remotely, starting a business, or relocating might provide a better result.

While it is true that running out of money during retirement is a possibility, you can take the necessary steps to ensure financial security while you live out your golden years. You can save early, pay down debt, and budget wisely before you retire.

You can also continue making money during retirement if you made wise investments or secured passive income streams before you took the plunge.

Some retirees choose to open their own businesses or rent properties for additional income too. Being retired doesn't mean you can't ever make more money. If you add money to your savings now, you can be in a much better position for retirement later.

Retiring early can cause you to lose health insurance through your employer, and in most cases, you won't qualify for Medicare until you reach 65.

But that doesn't mean you won't have insurance. If you retire early and lose your benefits, you can purchase a plan through the Health Insurance Marketplace or directly with a carrier.

You can also use a health savings account (HSA) to help cover medical expenses when you retire early. HSA distributions are not subject to federal taxes when used for qualified expenses.

Loneliness during retirement is often depicted in movies and on TV, but retirees can socialize like anyone else. When you're retired, you get to make all the decisions about how to spend your time.

If you mainly socialize at work, you can spend time with others by volunteering or participating in activities you'll now have the time for.

Keeping your loved ones close before retirement can also reduce loneliness later. If loneliness is a concern, consider retiring somewhere close to the people you care about.

Some people think Social Security retirement benefits will cover all their retirement expenses. However, Social Security was not designed to replace the income earned while working.

To maintain your pre-retirement lifestyle, you will need to supplement your Social Security benefits with other income, and retiring early might not be an option if you haven't planned ahead.

Some people choose to invest or continue working after retirement in order to stretch their funds. Regardless of your plans, a healthy amount of savings is essential for ensuring you can keep up with your cost of living.

Not all retirees quit working. Some continue working full-time, others part-time, and some even return to school and start new careers. You can work as little or as much as you like once you retire.

However, keep in mind that continuing to work can increase your tax burden. But it can also help you save more money and fill your time if you're bored.

Retiring doesn't magically lower the total cost of living. That could continue to rise. Your routine and daily expenses may change, but you will still need to pay for your house, food, and activities.

You may no longer need to commute to work, but you could find yourself spending just as much money filling your time with entertainment or commuting elsewhere.

Inflation will impact your cost of living over the next several years, and so will your location. Relocating to another area can stretch your dollar further or cause your savings to deplete faster.

There is no such thing as having too much time, even in retirement. You will just have the freedom to decide what to do with your time.

Retirees can do the same things non-retirees can, including working, volunteering, and enjoying hobbies. However, retirement is also a great time to pursue new passions or hobbies that you never had time for.

You might discover a new activity or interest that brings you joy and fulfillment. Time is a luxury that many working people would like to find more of.

Retiring early doesn't mean you can never afford to spend money on extras. While you should spend wisely, you can account for these extra expenses when planning for retirement.

You can determine before retirement how much you will need to save for the lifestyle you want and then create the right budget for you.

You never know what emergency expenses might arise, even after you retire. 

Continuing to save during retirement can help you prepare yourself financially for any unexpected events — and improve the chances of your retirement lasting longer than you had planned.

You can save money whether or not you continue working. If you can't put away extra money every week, you can at least save money by budgeting more carefully to make your money last longer.

Retiring later can result in larger Social Security benefits and more money in savings, but it isn't always the best idea.

If your job impacts your physical or mental health, it might make sense to leave earlier. Other people find it best to retire early when they need to care for loved ones or want the time to start their own business ventures.

Regardless of your retirement plans, preparing as early as possible is essential. If you make the right money moves now, it could allow you to retire early.

You might find it best to work with a financial advisor to assist in your retirement planning. If you choose to go it alone, educating yourself and estimating your benefits can give you a better understanding of what your retired life will look like.