Retirement Retirement Planning

7 Lies You’ve Been Told About Retirement Planning (And Probably Believed)

Outdated retirement advice may wreck your future plans.

By Josh Koebert , Edited by Laura Hohenstein

Updated May 31, 2026

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A lot of what people believe is retirement wisdom is not really true at all. Whether people believe certain things because they are comforting or because they haven't heard better information isn't really what's important.

What matters is getting access to the strategies that will actually help you transition to a stress-free retirement and stay financially secure into your golden years.

The following outdated rules of thumb and straight-up poor assumptions have been circulating for years. Here's why you shouldn't trust them and what you should rely on instead.

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You'll spend less in retirement

Some costs will indeed go down when children leave the home, and you may downsize to a smaller house. But other expenses, like health care, can actually go up quite a bit when you retire, even with the stability of Medicare to fall back on.

In fact, you might spend more in the first few years of retirement, when you have time to pursue hobbies and still have your mobility. Whether you have been planning to travel abroad or put in that sauna, these bucket list expenses can eat into an otherwise trimmed-down budget.

Spending can typically follow a "U" or smile-shaped pattern, rising up, then dropping, then rising again at the end of your retirement. To be safe, build a plan that assumes front-loaded spending in early retirement plus the rising cost of health care, instead of an overall lower, static budget.

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You'll pay less in taxes

Another misconception is that you'll have less income to live on and possibly be in a lower income tax bracket as a result. This assumption doesn't account for the different types of retirement income; however, all are taxed in different ways for seniors.

Your traditional 401(k) and traditional IRAs, for example, are taxed as ordinary income and not at lower capital gains rates. You'll also have to take out Required Minimum Distributions (RMDs) from the accounts, which may be more than you actually want to spend and could push you into a higher tax bracket.

When you add in Social Security benefits, which may be taxable under "combined income" rules, a significant chunk of your check could be subject to income tax. Both scenarios could be avoided if you diversify tax buckets and proactively plan to pay what you owe, even with a reduced monthly income.

You can always work longer if needed

It's true that you can sometimes add a few years to your career, assuming it's in your control. But economic, industry, and health changes can sometimes pull seniors out of the workforce before they are ready, and more than 40% of retirees leave the workforce earlier than planned.

Hoping to work longer may be more of a gamble than a plan, so any extra years should be treated as a bonus. Instead of counting on working in your late 60s as a safety net, save as if you won't be able to push retirement back. Anything extra will still be put to good use.

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Social Security will cover most of what you need

The average monthly Social Security benefit for retired workers in 2026 is around $2,071. But Social Security was never designed to be a stand-alone retirement plan, only a replacement for around 40% of pre-retirement income.

So, can you live without 60% of your wages? It's possible – but not likely. Think of Social Security more as a foundation you can build upon, and calculate what you'll truly need with the tools on the My Social Security website. Realistically, savings, pensions, and part-time work will need to fill in the gap.

Your 401(k) is enough

Even if you're fortunate enough to have money in a 401(k), it's not necessarily the end-all, be-all to a secure retirement. A modest balance may not cover your immediate needs, forcing you to drop your standard of living later in retirement.

Data shows a large share of workers are not currently saving enough in workplace plans, and have just 19% of what they should in those accounts. This 401(k) gap occurs when people start saving late, switch careers, face layoffs, or don't take advantage of employer matches. Adding IRAs, taxable investments, and HSAs to your plan ensures you don't put all your eggs into one underfunded basket.

Medicare will pay for all health issues

Original Medicare does pay for hospital and medical services, but explicitly doesn't cover most routine dental, vision, or hearing care. You'll also be on your own for long-term custodial care, such as assisted living services. Since these can be very expensive, they can add to the total paid for health care in retirement, and don't even include things like deductibles, copays, and coinsurance obligations.

Instead of ignoring these costs, which can add thousands to an annual budget, look at what you'll reasonably expect to pay with even modest health care needs. If there's still time, long-term care insurance or a dedicated medical savings fund could be just what you need to sail through retirement without adding new medical debt.

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A million dollars is plenty

There was a time when a million bucks was something to brag about. If you expect to live on around $40,000 - $50,000 a year before taxes, for example, that $1,000,000 nest egg must keep up with inflation and earn enough to survive market swings.

Imagine how taxes on withdrawals, Medicare gaps, higher later-in-life medical spending, and house repairs can all eat at that money. It may turn out to be much less than what you need for any number of unexpected situations. Instead of being satisfied with this outdated and arbitrary number, look at what you'd need to live well in your geographic area and with your unique lifestyle.

Bottom line

Believing comforting myths about lower spending, taxes, and account balances may feel good in the moment, but they can leave you woefully unprepared for real life. Unfortunately, they can be hard to avoid when even some in the financial industry may keep repeating them.

To avoid a miscalculation, create a personalized retirement plan in the years when you can still affect savings and earning outcomes. Don't hesitate to reach out to a financial advisor and share your unique concerns about having enough in retirement. They should get you sorted with a solid, achievable number that doesn't leave so much up in the air.

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