Retirement has changed in ways that many near-retirees don’t fully grasp until they’re already in it. Longer lifespans, higher costs and the disappearance of pensions have reshaped what it takes to retire securely. Financial experts say the biggest risk is relying on outdated assumptions that no longer reflect economic reality.
Below are six common retirement assumptions that worked for previous generations but no longer apply today — and how experts suggest reframing them.
A major misconception is that retirement will last only 20 to 25 years. Longer life expectancies mean that many retirees must actually plan for closer to 30 to 40 years of income, according to Sri Reddy, SVP of retirement and income solutions at Principal Financial Group, who works with long-term retirement income strategies. Reddy added, “That longer timeline fundamentally changes how you should be planning for retirement. People need higher savings rates, more flexible income sources and a stronger understanding of longevity risk than previous generations.” Longevity risk refers to the possibility of outliving your savings.
Lynn Toomey, founder of Her Retirement, agreed, calling retirement “something closer to a second adulthood than an extended vacation, with greater focus on health, income and risk over time.”
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Inflation is no longer just “a predictable background factor,” Reddy said. Now it’s a much more dynamic threat, especially over multidecade retirements.
When prices rise faster than expected — whether for housing, food or healthcare — it disproportionately affects retirees who are drawing down their savings, he explained.
Another common assumption is that your Social Security check will keep up with inflation, but the program’s cost-of-living adjustments (COLAs) have often fallen short, added Yehuda Tropper, CEO of Beca Life Settlements.
Traditional “safe” portfolios, once the reliable foundation of retirement, may no longer generate enough growth or income to last through longer retirements, either, Reddy pointed out. “Today, lower yields and longer lifespans mean bond-heavy portfolios often don’t generate enough income or enough growth to last 30 or more years.”
Tropper stressed how this makes a “multi-pronged savings and investment strategy” incredibly important. “Not just 401(k)s and IRAs, which are just a starting point, but also things like life insurance, annuities, dividends and bond or CD laddering.” These tools are often used together to balance growth, income and stability over time.
Healthcare and caregiving costs are among the most underestimated and financially disruptive retirement expenses. According to Amy O’Rourke, an aging life care manager, people who live to age 80 have a statistically high chance of needing care for an estimated three years. Assisted living communities run between $5,000 and $12,000 monthly, costs that are higher than the average household’s mortgage. These expenses often arrive later in retirement, when portfolios may already be under strain.
This is usually out of pocket, she added, “as there are very scarce public benefits that will pay for assisted care either at home or in a community.” These costs can total $300,000 or more, money the average retiree doesn’t have in savings.
Toomey pointed out that families hoping to avoid becoming a financial burden or preserve an inheritance need to really think ahead. Rising care costs can quickly change assumptions about what assets may ultimately be passed on.
Social Security provides a supplement for retirement, but it was never designed to fully fund modern retirements. Tropper pointed out that Social Security “was only designed to keep seniors out of extreme poverty by covering 40% of their pre-retirement income.” That gap must be filled by personal savings and income strategies.
Reddy pointed out that it’s also common for retirees to underestimate how claiming age affects lifetime income. “For those with long life expectancies, delaying benefits can be incredibly valuable,” she added. Claiming decisions can shape income for decades, not just the early years of retirement.
Many retirees choose a phased transition involving part-time work, caregiving or new income streams as financial realities set in. “For your parents, retirement was often a finish line,” Toomey said. For today’s near-retirees, retirement “will be less of a finish line and more of a start to a new chapter.” This shift often reflects both financial necessity and a desire for continued engagement.
Reddy said it’s important to strive for “resilience, not perfection” as the most successful plans “build options, not just projections.” Flexibility allows retirees to adapt to changing markets, health needs and personal priorities.
Modern retirement requires planning that prioritizes flexibility, resilience and long-term adaptability over fixed assumptions. Experts emphasize building plans that can evolve as circumstances change rather than relying on static projections.
“This is not your parents’ retirement,” Toomey concluded. “It’s more complex, but it also offers more choice for those who treat it as a transition rather than an ending.”
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This article originally appeared on GOBankingRates.com: This Is Not Your Parents’ Retirement: 6 Assumptions That Don’t Hold Up Today
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