6 Myths When Preparing for Your Railroad Retirement

Welcome to another edition of the Highball Advisors Railroad Retirement Whiteboard! I'm John McNamara from Highball Advisors, and today we're going to bust six common myths that can derail your railroad retirement plans. These are traps you need to avoid as you prepare for a secure retirement. Let's walk through them.

Myth #1: "I’ll be able to live off my railroad retirement."

It’s not guaranteed. While those with 30 years of service might manage it, especially with a solid spending plan, it’s risky to rely solely on railroad retirement. If you have fewer than 30 years, it’s even more important to have additional savings. Your lifestyle and spending habits will play a big role, so don’t assume railroad retirement alone will be enough.

Myth #2: "I’ll only invest up to my 401(k) match."

Don’t limit yourself to just the match. Ideally, you should aim to invest at least 15% of your income, up to the annual contribution limit if possible. Consider maximizing contributions to a Roth 401(k) if available. This approach builds a stronger nest egg over time, letting compounding work in your favor.

Myth #3: "I’ll work through my retirement."

Many people plan to work in retirement, but the reality often differs. While 70% say they’ll work, the enthusiasm usually fades after a few months off. Additionally, connections and opportunities may dwindle, making it harder to find work. Consider whether you’ll need to work or simply want to, and plan accordingly.

Myth #4: "Medicare will cover all my medical expenses in retirement."

Medicare doesn’t cover everything. You’ll still have out-of-pocket expenses like copays and prescriptions. If you retire at 60 with 30 years of service, you’ll need to cover healthcare costs for several years before Medicare kicks in. Make sure your savings can handle these extra expenses.

Myth #5: "It’s too late to save for retirement."

It’s never too late to start saving. Even if you’re 55 with little saved, begin now and let compounding work for you. Accept that the market might fluctuate, but over time, your investments will grow. Building even a modest nest egg can make a difference in retirement, so don’t delay.

Myth #6: "I can do it on my own."

Studies show that working with a professional leads to better outcomes. A financial advisor can provide a second set of eyes, helping you stay on the right track and giving you confidence in your retirement plan. Don’t underestimate the value of professional guidance.

These six myths can lead you astray if you’re not careful. If you're at or near retirement, consider going through my Boarding for Railroad Retirement process. Together, we can address each of these concerns and ensure you're on the right path.

If you found this helpful, please subscribe to the channel and click the notification bell. Until next time, stay safe, stay on track, and take care. So long, everybody!

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Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. Highball Advisors encourages you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Highball Advisors, and all rights are reserved from Highball Advisors, and all rights are reserved.