Misconceptions about retirement finances—like savings, Social Security, spending, and retirement income—can make leaving the workforce feel more uncertain. You may feel less prepared than you really are. Or you may overlook important costs.

In this article, we debunk six common myths about retirement finances and pair them with realistic, practical advice. Knowing the facts can help you refine your retirement planning, protect your savings, and set yourself up for a secure future.

6 Retirement Money Myths, Debunked

Myth #1: Your retirement savings will last as long as you do. 

Americans are living longer, thanks to improvements in health care, living conditions, and lifestyles. In fact, according to the Social Security Administration, roughly 1 out of every 3 65-year-olds today will live until at least age 90, while 1 in 7 will live to age 95 or older.¹ That means your retirement could span several decades.

Increased longevity means more older adults face the risk of outliving their retirement savings. And while Social Security benefits can help, they’re not enough for most retirees to live on.

The Nationwide 2026 Financial Growth & Protection Index suggests a growing number of Americans are aware of this risk, and their financial priorities are shifting. In a survey, 84% said the American Dream is now more about financial stability than building wealth.²

This means that for people approaching or living in retirement, financial success may be less about chasing the highest possible returns and more about making savings last. Eighty-one percent (81%) of those surveyed said they’d prefer guaranteed, predictable retirement income over investments with greater growth potential.² With rising prices, changing markets, health care costs, and the possibility of a longer retirement, steady income and protection from major losses can help ensure you'll have enough to support yourself for as long as you live. 

"Financial progress still matters to Americans, but the path to achieving it has changed," Craig Hawley, President and COO of Nationwide Financial, said in a press release. "People still want to build wealth, but today's environment has made financial stability and resilience just as important. Protecting what you've worked hard to build has become a critical part of achieving long-term financial success."

Myth #2: Your living costs will be less in retirement.

You might think your basic expenses will drop significantly in retirement. But that’s not necessarily true. Some costs may decrease; for instance, if you pay off your mortgage and/or car loans or you’re no longer supporting children. But other areas of spending may increase. Consider the following:

• What's the biggest threat to retirement security? In a survey of 1,000 U.S. consumers age 60-65, 90% said inflation. Inflation can impact things like groceries, utilities, and gas, and zap the purchasing power of your retirement savings over time. According to the Nationwide Retirement Institute Peak Retirement Survey⁴, current retirees said they spend more than half of their retirement income (53%) on basic expenses (non-retired participants said they expect to spend 42%). What was retirees’ advice to their still-working peers? You’ll likely need more money than you think.
• Unexpected expenses such as a medical crisis or emergency home repair can put a major dent in your retirement budget.  
• Discretionary spending can change in retirement, too. For example, you may decide to take those vacations you’ve always talked about or make long-awaited improvements to your home.
• You may qualify for fewer tax breaks once you no longer have dependents, or you pay off your mortgage. And keep in mind that tax rates (e.g., property tax) can rise over the years.

According to the Nationwide Financial Growth & Protection Index, 75% of Americans say covering basic expenses is their main financial priority—and 45% had to dip into savings to cover those expenses.² Your retirement income plan should help you estimate how much monthly income you’ll need in retirement and make sure you have reliable income to cover the essentials. It should also prepare you for unexpected costs that will inevitably arise.

Myth #3: Social Security will cover all your expenses.

As a working adult, you pay into Social Security for many years. So it should keep you afloat when you retire, right? Not quite. For the average person who retires at age 65, Social Security benefits only replace about 37% of past earnings.³ More than 1 in 3 retirees receive less in benefits than they expected to when working.⁴ Also, without action from Congress, Social Security beneficiaries could see a benefit cut of roughly 23% starting in 2033. Nearly three-quarters of current and future retirees said such a cut would impact their retirement "a lot."⁴

Claiming Social Security at age 70 allows you to receive the maximum monthly payment—so generally, it’s a good idea to wait as long as possible to draw benefits. It’s also important to have supplemental retirement savings and income sources to help fill in the gaps.

Myth #4: Medicare will cover all your medical bills for free.

Many older adults dangerously underestimate their health care expenses in retirement. Specifically, there’s a notion that Medicare provides complete health care coverage with no out-of-pocket costs. But that’s not the reality. A recent study from the Boston College Center for Retirement Research found that the typical retiree spent an average of $5,444 out of pocket on health care costs in 2022 alone.⁵

Whether you choose original Medicare (Parts A & B) or Medicare Advantage, you’ll be responsible for certain costs such as premiums, deductibles, and co-payments. And these costs can add up quickly. More than half of participants (59%) in the Peak Retirement Survey said they lack confidence in their ability to pay for health care expenses as they age.

Strategies that can help prevent health care expenses from draining your retirement savings include:

• Budgeting for medical-related expenses you can predict
• Contributing to a health savings account (HSA)
• Purchasing long-term care insurance
• Choosing the right Medicare plan for your needs and lifestyle

Myth #5: You can work for as long as you want to.

“When it comes to when you’ll retire, even the best-laid plans can go awry,” said Kristi Rodriguez, Senior Vice President of the Nationwide Retirement Institute. “There are so many factors that can impact your ability to work in your later years, including job market volatility, health issues, and caregiving duties.”

Nearly 1 in 5 currently retired Peak Retirement Survey participants warned future retirees to not assume they can work for as long as they’d like. And 64% said they stopped working earlier than planned.

The bottom line? Don’t bank on working indefinitely; if you don’t have enough money and cannot work, your only option will be to spend less. Adopting a “hope for the best, plan for the worst” mindset in retirement planning can help you ensure you’re covered—even if you retire earlier than expected.

Myth #6: You don’t need help with retirement planning.

It can be tempting to dive head-first into your own retirement planning. But this is a process that requires careful consideration and ongoing adjustment.  Retirement income planning should be based on your personal needs—not just a universal rule like withdrawing 4% of your savings each year. Instead of focusing mainly on growing your savings, you need a plan for turning those savings into dependable income that can last throughout retirement. Seventy-four percent (74%) of respondents from the Nationwide Financial Growth & Protection Index survey said they'd be more likely to work with a financial professional who could help protect them financially.²

This is why expert guidance can be a plus. Consider reviewing your retirement income, expenses, savings withdrawals, insurance, and investment risk with a qualified financial professional as you get ready for your next chapter. 

For additional help in planning your retirement, consider:

• Checking with your plan provider: If you have an employer-sponsored retirement plan like a 401(k) or SIMPLE IRA, ask what planning resources, tools, and/or experts are available to assist you.
• Talking to a professional: A financial planner has the expertise to help you navigate the retirement planning journey, considering factors like investment strategies, tax considerations, and long-term objectives. They’ll work with you to develop a personalized plan tto help you build your retirement confidence. It’s a partnership that can pay off: In Nationwide's Peak Retirement Survey, 86% of participants said working with a financial advisor on their retirement plan improved their readiness for retirement.⁴

Take proactive steps to shape the retirement you want

Exiting the workforce is a major life transition, and the way you prepare for it will have a big impact on your quality of life. Lessons learned from recent retirees highlight the importance of understanding the financial realities of retirement. Getting all the facts—and seeking professional advice and resources to guide you—can help you plan wisely for your next chapter.

Frequently asked questions (FAQ)

How much money do I need to retire?

There’s no single retirement amount that works for everyone. A common estimate is that you may need about 80% of your pre-retirement income. That said, your savings goal should reflect your expected expenses as well as your various income sources, health needs, and lifestyle. 

Will Social Security cover all my expenses?

Probably not. Social Security was designed to replace only part of your income before retirement—roughly 37% of past earnings, according to some estimates. Most people also need savings, a pension, investments, or another source of retirement income. 

Is Medicare free?

No. Most people don’t pay a premium for Medicare Part A, but Medicare still has costs. You may pay premiums, deductibles, copays, and coinsurance, as well as the full cost of services Medicare doesn’t cover (like routine dental services and long-term care in a nursing home).

This content on financial myths in retirement was developed in partnership with Nationwide (NFM-23804AO). Learn more about the variety of solutions that can help add protected monthly income to your portfolio. 

Sources

1. Social Security Administration. When to Start Receiving Retirement Benefits. Found on the internet at https://www.ssa.gov/pubs/EN-05-10147.pdf

2. Nationwide Financial Growth & Protection Index Results. June 2026.

3. Center on Budget and Policy Priorities. Top Ten Facts About Social Security. Found on the internet at https://www.cbpp.org/sites/default/files/atoms/files/8-8-16socsec.pdf

4. Nationwide Peak Retirement Survey Report (PPT). December 2023.

5. Boston College Center for Retirement Research. How Much Does Health Spending Eat Away at Retirees’ Income? An Update. February 3, 2026. Found on the internet at https://crr.bc.edu/how-much-does-health-spending-eat-away-at-retirees-income-an-update/