Financial Facts vs Fiction
Test Your Financial IQ With This Quick Quiz. Can you tell financial facts from fiction? Put your knowledge to the test.
Carrying a Credit Card Balance Improves Your Credit Score
Fiction: Carrying a balance on your credit card does not improve your credit score and can incur costly interest charges. Paying your balance in full each month helps show that you’re a responsible borrower — plus, you avoid accruing high-interest debt. If you can’t pay the balance in full each month, keep your credit card balance low (ideally under 30% of your credit limit) and make all your payments on time.
Medicare Covers All Health Care Expenses in Retirement
Fiction: While Medicare does provide health care coverage for retirees, it’s not comprehensive. This myth can leave retirees unprepared for significant medical expenses. Medicare can cover hospital stays, doctor visits and some medical equipment, but it has notable limits and gaps. Dental care, vision care, hearing aids,
prescription drugs and long-term care are either not covered or covered only under some circumstances. Supplemental insurance plans (so-called “Medigap” policies) can help bridge gaps in coverage. Additionally, rising costs mean that even with Medicare, out-of-pocket expenses can be substantial. Planning for health care costs should be a cornerstone of any sound retirement strategy.
People Over 50 Can Make Catch-up 401(k) Contributions
Fact: For 2025, individuals aged 50 and older can contribute an additional $7,500 beyond the $23,500 standard annual limit to their 401(k) plans, bringing their total potential contribution to $31,000. Those aged 60 to 63 may qualify for an even higher contribution — up to $11,500 more than the standard amount. Catch-up contributions are especially helpful if you weren’t able to build retirement savings during your younger years due to student loans, raising children or other financial priorities. Even if you’ve been diligent about saving, these extra contributions can significantly boost your retirement nest egg. The tax advantages of additional contributions may also help reduce your income taxes.
Financial Planning Is Only for the Wealthy
Fiction: This myth can discourage some people from taking control of their finances. Financial planning is about making the most of the resources you have, regardless of your income level. Whether you’re living paycheck to paycheck or have substantial assets, everyone can benefit from having a clear picture of their financial situation and a prudent plan for the future.
It’s Important to Check Your Credit Report
Fact: Consumer credit agencies recommend checking your report at least annually. It can help you catch errors, detect signs of identity theft and better understand how certain financial behaviors affect your creditworthiness. With the increasing use of AI by scammers, identity theft is becoming more sophisticated. Frequently checking your credit report and using a credit monitoring service that flags suspicious activity are among your best defenses. All three major credit bureaus provide free annual credit reports. Some credit card issuers give free access to your credit score, and there are a variety of apps that give partial or full access to your credit report.
So, how’d you do? Are you a financial fact finder, or have you fallen for some of these popular fictions? Knowing the facts can help you avoid monetary missteps. A qualified Financial Professional can also help you separate fact from fiction and make a personalized plan to help strengthen your financial future.
Sources
https://health.usnews.com/medicare/articles/when-do-you-need-medicare-supplemental-insurance-medigap