13 retirement myths

Myth No. 1: You need a big income to build a big nest egg. Other myths busted: A million bucks is your magic number and what it takes to retire early - from Money Magazine.

Social Security won't be there
MYTH
Social Security won't be there
Social Security isn't going the way of the LP record soon. Sure, the headlines are alarming. In just 10 years the cost of Social Security benefits will outstrip the amount that workers pay into the system, according to government studies. And by 2041 the Social Security trust fund reserves will run out, unless Washington gets around to addressing the problem.

But that doesn't mean Social Security will shut down. Enough new money will continue to flow into the program from payroll taxes to fund 70% to 75% of scheduled benefits until 2081. Andwith a few reforms, Social Security could continue to pay full benefits. "Compared with theother issues we face, such as financing health care, fixing Social Security is child's play," says Alicia Munnell, head of the Center for Retirement Research at Boston College."You could raise the payroll tax by just one percentage point for both employers and employees, and you would be able to fund full benefits for the next 75 years."

So it's a good bet that you can count on something close to what retirees collect today. The real issue is how big even a full benefit will be. "Most Americans think that Social Security will replace more of their income than it really does," says Dallas Salisbury, president of EBRI.

For the average retiree, Social Security currently covers only 39% of pre-retirement income; and if you earn more than the maximum taxable amount ($97,500 this year), Social Security will replace just 26%, on average, of the income you earned on the job. And those percentages will drop over the next 20 years to 33% and 20%, respectively. That's largely because Medicare Part B premiums, which are deducted from your Social Security check, are increasing at a faster rate than your benefit's annual cost-of-living adjustments.
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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.