A full third of Americans believe that winning the lottery is the only way they can retire. This is so sad..

What? Playing a game of chance is the only way they can retire? Do you ever wonder if winning a game – where your odds are 1 in 175,000,000 – is the only way you’ll get to make Hawaiian shirts and flip-flops your everyday uniform?

Do you feel like you might be gambling with your future?

If you do, that’s not a good sign. But believing you may need to win the lottery to retire is somewhat understandable when the financial struggle facing a majority of North Americans is considered: 78% of American full-time workers and 48% of Canadian workers are living paycheck-to-paycheck.

When you’re in a stressful financial situation like this, saving for your future may feel like a gamble in the present. But believing that “it’s impossible to save for retirement” is just one of many bad money ideas floating around. Following are a few other common ones. Do any of these feel true to you?

Bad Idea #1: I shouldn’t save for the future until I’m debt free. False! Even as you’re working to get out from under debt, it’s important to continue saving for your retirement. Time is going to be one of the most important factors when it comes to your money and your retirement, which leads right into the next Bad Idea…

Bad Idea #2: It’s fine to wait until you’re older to save. The truth is, the earlier you start saving, the better. Even 10 years can make a huge difference. In this hypothetical scenario, let’s see what happens with two 65-year-old friends, Betty and Tiffany.

• Betty started saving when he was 30. Over the next 25 years, Baxter put away $2,500 a year for a total of $62,500 in an account with a 5% rate of return. He stopped contributing but let it keep growing for the next 10 years.
• Tiffany started saving 10 years later at age 40. Will also put away $2,500 a year for 25 years into an account with a 5% rate of return.

Even though the two friends put away the same amount, they ended up with different amounts at retirement:

• Bettys account growth would be to $204,074.
• Tiffany's account growth would only be to $125,284 at the same rate of return.

Is that a little mind-bending? Do we need to check our math? (We always do.) Here’s why Betty ended up with $78,790 more: her money had more time to compound than Tiffany's, which, as you can see, really added up over the additional time. So what did Tiffany get out of this? Unfortunately, she discovered the high cost of waiting.

Keep in mind: All figures are for illustrative purposes only and do not reflect an actual investment in any product. Additionally, they do not reflect the performance risks, taxes, expenses, or charges associated with any actual investment, which would lower performance. This illustration is not an indication or guarantee of future performance. Contributions are made at the end of the period. Total accumulation figures are rounded to the nearest dollar.

Bad Idea #3: I don’t need life insurance. Negative! Financing a well-tailored life insurance policy is an important part of your financial strategy. Insurance benefits can cover final expenses and loss of income for your loved ones.

Bad Idea #4: I don’t need an emergency fund. Yes, you do! An emergency fund is necessary now and after you retire. Unexpected costs have the potential to cut into retirement funds and derail savings strategies in a big way, and after you’ve given your last two-weeks-notice ever, the cost of new tires or patching a hole in the roof might become harder to cover without a little financial cushion.

Are you taking a gamble on your retirement with any of these bad ideas?

Sources:
The Balance: "What Are the Odds of Winning the Lottery?" 11.7.2017 
USA TODAY: "Can't keep up – More Americans living paycheck-to-paycheck." 8.24.2017 
Financial Post: "Nearly half of Canadians are living paycheque to paycheque — and that has big consequences for retirement security." 9.7.2016