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Mar 17, 2022

Our world is full of myths. We use them to make sense of things. The financial world is no different. On today’s episode, we are going to explore some common financial myths and deconstruct the valuable information we can learn from each.

Myth #1: Shifting from stocks to bonds removes the volatility from your portfolio.

On a basic level, bonds are going to be less volatile than most stocks. But we have to remember that bonds don’t have principal protection so they depend on interest rates.

If you bought a bond and interest rates went up and you sell your bond you may end up with less money. The volatility with bonds just looks different than the risk associated with investing in stocks.

Myth #2: Once you are retired life insurance is no longer necessary.

This certainly isn’t true for everyone. Do you still have people who are depending on you financially? This might be children or a spouse. Life insurance can also be a form of protection against long-term care costs.

Myth #3: You will need less income when you are retired than you are working.

A lot of people assume they’ll be spending less in retirement but this isn’t always the case. You’ll probably have to pay for at least some medical expenses out of pocket. You also have more discretionary time to spend money.

Myth #4: You will be in a lower tax bracket in retirement. You may think since you aren’t working, you’ll be in a lower tax bracket but we often find this isn’t true. For most accounts like a 401(k) and IRA you’ll have a tax bill in retirement. It’s important to find the balance between how much money you need to live and how to keep your tax plan efficient.

Myth #5: Financial planning is easier to do without a professional. Some people think planning is easy and accessible in today’s world with our technology and knowledge. But saving for retirement is becoming more and more complex. Having an advisor can help you address nuances in your plan and prepare for the possibility of longevity.



1:21 – Where do myths come from?

2:40 – Shifting from stocks to bonds is less risky

5:42 – Once you retire you no longer need life insurance

7:26 – You will need less income in retirement

10:35 – You will be in a lower tax bracket in retirement

13:02 – Financial planning is easier to do without a professional

17:40 – Looking for easy answers