It may not exactly be the fault of the individual, but many Americans today struggle to save up for their retirement. Whether it’s low working wages or high prices in the economy, it’s hard for a lot of people to set aside money for the future when they’re trying to live day to day. This is why systems like Social Security, Medicaid, and Medicare are so important to Americans today. There are some misconceptions about saving for retirement that you should be aware of when you do start to save for retirement.
1. Buy more bonds as you get older. Where you put your assets are very important decisions. This is important for actually generating and preserving your wealth. One of the rules that people used to follow is to subtract your age from 100 to determine how much stock and bond investment you should have. However, it’s not that easy to determine anymore. It really depends on your risk tolerance, risk capacity and most importantly your goals.
2. You’re okay if your advisor is a fiduciary. A new rule from the Department of Labor says that more retirement advisors will have to legally act as a fiduciary. A lot of advisors are not held to a fiduciary standard now and this new rule can help regulate that. This means that advisors will now be legally required to keep the client’s best interest in mind, minimize conflicts of interest, and charge a reasonable fee. Sounds like something that should have been put in place years, if not decades ago.