In theory, reaching retirement age shouldn’t be a cause of concern. After working for decades, paying your taxes, and saving money, you should finally be able to enjoy the fruits of your labor and take advantage of all the free time you have for friends, hobbies, and family. 

However, the reality isn’t nearly as charming. For most Americans, the prospect of retirement is a cause of stress and anxiety, both medically and financially. According to recent studies, only 17% of Americans believe they have enough money saved for retirement and 10% have a written plan for retirement. Additionally, one-quarter of all retirees have an average annual income of less than $25,000. 

These bleak figures don’t necessarily indicate that the average American doesn’t try to prepare for retirement. On the contrary, more and more people in the US are trying to save for when they’re older, but they do it based on myths that do more harm than good: 

Myth 1: A High Paycheck = Guaranteed Savings 

When you advance in your career, it’s normal to want to earn more in order to secure your financial future. Nevertheless, there are many individuals who used to have a high paycheck but aren’t doing so great in retirement. Similarly, there are people who earn a lot but still can’t manage their finances and live from paycheck to paycheck. As Goethe said: 

Many people take no care of their money till they come nearly to the end of it 

Having a high salary can help you live a comfortable life, but the idea that it will lead to a seamless retirement is a myth. If you don’t know how to manage this money and spend it without any strategy, your retirement will cause a financial shock. To avoid this, follow Warren Buffet’s advice: save first, spend later. When you receive your paycheck, set some money aside for savings, and then spend the rest, never the other way around. Don’t wait until you’re too old either. To guarantee a comfortable retirement, get into a saving mindset starting with your mid-20s, even if that means setting aside just $100 every month. 

Myth #2: Your Retirement Money is Safe in a Regular Savings Account 

When most people start saving, they open a second bank account, usually at the same bank as their debit card. While this may be a great strategy in the short term or for emergency funds (which have a withdrawal period of maximum three years), it doesn’t work in the long run. Money deposited in ordinary bank accounts is affected by inflation, so by the time you reach retirement age, you might realize that you’re poorer than you think. 

To maximize the potential of your earnings, you need to think bigger and think long term by investing. 

On average, even a high-yielding savings accounts doesn’t deliver more than a 2.5% interest rate, so consider these long-term investment optionsinstead: 

  • The stock market. Although stocks can be risky short term, your investments can pay off in the long run provided you back them up with a solid strategy. If you’re risk-averse, a low-cost index fund can be a great starting point. 
  • Forex. Unlike the stock market, Forex is a high-liquidity and high-volume market, which can be more advantageous for you. Again, you have options if you’re a beginner. For example, social trading Forex brokersallow you to examine stats and copy trades of other network members. 
  • Real estate. Although the real estate market fluctuates a lot in the US, this remains one of the most profitable long-term investments. In particular, buying a rental property in up-and-coming urban areas is a strategy that pays off. 

Myth #3: I Don’t Have Enough Money to Invest 

One of the most common reasons why many people postpone investing, apart from emergency expenses, is that they believe they don’t have enough money for it. This is nothing but a myth. 

There are many investment ideas that don’t require a high minimum and, believe it or not, you can start building your wealth from as little as $1,000. For example, you can buy commission-free exchange-traded funds, invest in ETFs, or you can join a P2P lending platform. Even if you’re starting with just a little bit of money, this is practice for the future and, by the time you reach retirement, you will have earned enough to dabble in other high-ROI practices. 

Myth #4: I’m Not Knowledgeable Enough to Invest 

While the stock market and other long-term investment strategies may sound alluring to many, the average American is becoming more and more risk-averse and would rather keep their money in a savings account. The myth that investments are only for affluent individuals who have a background in finance is still around, but, in the age of the Internet, you don’t need a degree in finance to be successful. Nowadays, the average trader is no longer an executive in his 60s. Many investment options, Forex included, have low barriers to entry, which means that you can use them to generate retirement money from your early 20s. There is a lot of information out there, you can join investment forums, use demo accounts to practice your strategies or hire a robo-advisor to manage your portfolioif you’re hesitant. 

Myth #5: All Debt is Bad 

Millennials are becoming more and more debt-averse, but experts say this attitude won’t necessarily yield great results when they reach retirement. Without a doubt, drowning yourself in debt is not recommended, but people should differentiate between good and bad debt.

For example, getting a credit card straight out of college isn’t a good idea, because the things you buy with your credit card lose their value and don’t generate income. Neither is getting a payday loan because the fees are enormous. On the other hand, getting a mortgage can be considered good debt, because in time, the property can increase in value and you can sell it after you retire.