Every time I use a retirement calculator — which I do as a hobby, how other people might, say, cross stitch — I hover for a beat over the field that asks when I want to retire.
Sometimes I stretch it out to get a result that says I can spend more and save less right now, which seems pretty fun. Occasionally I shoot for retiring early, another fun (and, the calculator tells me, utterly far-fetched) idea. Often I go with the tried-and-true age 65.
Though I may be one of the few people who uses a retirement calculator at all, let alone regularly, I’m not the only one who thinks I can pick my retirement date like I select produce at the grocery store. Two-thirds of millennials say they’ll work past age 65; one-third plan to pass 70 and a very ambitious 12% plan to die at their desks.
Those plans are enterprising but unlikely: Only 23% of today’s retirees worked beyond 65, points out JP Morgan’s annual Guide to Retirement, and while you could argue we millennials will benefit from health care advances, life expectancy at age 65 hasn’t changed all that much since 1940, and health isn’t the only enemy to those work-until-you-die dreams, as the below graph illustrates:
Needless to say, working longer — advice that even financial experts dish out as a patch for a too-small retirement fund — isn’t always possible, and it shouldn’t be a crutch.
Here are other retirement-related misconceptions millennials often share:
The belief that Social Security will run out
About half of millennials believe they’ll get no benefits from Social Security, a belief that is likely wrong and potentially damaging, as Liz Weston recently noted in her column for NerdWallet.
What is accurate: We — and anyone else born after 1960 — won’t be able to access full Social Security benefits until age 67, two years later than the original full retirement age of 65. Current projections have benefits taking a haircut around 2034; at that point, it’s expected the system will rely on tax income, enough to pay just 77% of scheduled benefits.
Based on today’s average monthly benefit, that cut would be worth about $300 a month. It will be more in inflated dollars, of course, but it still won’t be a life-changing amount. You should plan to get some support from Social Security, which means you don’t need to replace 100% of your pre-retirement income in retirement; most people do fine on 70% to 80% of it.
The belief that saving is safer than investing
Because we’re young, with several decades between us and retirement, we have the ability to weather the market and the risk that comes with it, but many of us aren’t taking advantage: Millennials hold 70% of their savings and investments in cash, according to BlackRock.
At best, cash is money in a savings account where you’ll generally earn less than 1% in interest but your money is protected by FDIC insurance. There’s a time and a place for this: short-term goals and emergency funds, mainly.
You won’t lose money saving, it’s true. When you invest — through a retirement account like an IRA or a brokerage account — you might lose money, at least in the short term. But you also have the potential for gains that laugh at their measly counterparts in a savings account: A portfolio with a 60/40 split between stocks and bonds had an average annual return of 8.7% between 1926 and 2015, a period that includes some seriously ugly years (most recently, 2008).
On a $10,000 initial investment over 40 years, the difference between that return and a 1% interest rate is the difference between an end balance of $320,500 and one of $15,000.
The belief that we’ll have more money to save later
I love to tell myself this lie, even though it has proven mostly untrue thus far.
Sure, my earnings have increased since my early 20s. But so have my expenses: Among other things, I’ve added a toddler and a house. The latter was built in 1910; its walls are literally kept from crumbling by horsehair and, more figuratively, my own dollar bills.
More importantly, earnings growth tends to slow as we get older, and that aforementioned investment growth really shines when you get started early. There are certainly plenty of drains on your wallet when you’re young — student loans are at the top of that list — and many people are indeed able to save more as they age. But in general, it makes sense to save as much as you can, when you can. Don’t pass the buck to your future self.
The belief that a big, fat windfall is coming our way
A quarter of millennials believe their retirement will be funded by winning the lottery or “gifted money” like an inheritance. If this comes true for you, I will send you my congratulations with a side of jealousy.
I assume that most of those respondents were being facetious, at least about the lottery portion. Powerball says our chances of winning are one in many, many, many million. The lottery is about as far from a reasonable retirement plan as you can get.
As for the inheritance, there is still a disconnect between expectations and reality: The odds are better, but not even close to a slam dunk. Fewer than half of baby boomers think it’s important to leave money to heirs, which means your parents may be blowing through that money while you’re counting on it.
This article was written by NerdWallet and was originally published by Forbes.