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Retirement is supposed to be the easy life, the golden years where you travel and play with your grandkids. It shouldn’t be a mad dash to figure out how to pay for your expenses because you didn’t plan well pre-retirement. As more Boomers are heading towards retirement, the questions about whether everything is in place or not loom large on the horizon.

Whether you’ve got a well-funded 401k and pension or you’ve saved and are going to use your social security benefits, there are probably some areas where you need to shore up your retirement plans. I’ve assembled a list of the most overlooked and under-prepared spots in planning for retirement. Maybe you won’t see any space for improvement in your plan, but if this list gives you even one spot to work on, it can mean thousands more in your pocket as you enter retirement.

Accessing social security too early

So the earliest you can access your SS benefits is 62, but doing so can cost you a tremendous amount of money in the long run. Social security checks each year after 62, with the maximum monthly payout coming at 70. 65 is typically considered to be “full retirement” age, but if you wait until 70 to access social security benefits, you’ll gain a whopping 32% more benefit than if you start earlier.

Though the number of retirees accessing benefits at the earliest age has diminished, most still do not wait long enough to fully get the benefit of their social security. It is in Boomers’ best interest to delay accessing social security benefits as close to age 70 as possible.

Not having an actual retirement plan

This is a big one. Many Baby Boomers believe their pension or savings will carry them a lot farther than it will in reality. What’s worse, some don’t even have long-term expenses planned out to compare with monthly income. This doesn’t even take into consideration all the fun stuff you’ll want to do now that you’re not working!

Going into retirement without a plan is a terrible idea. For most Boomers, it’s worth consulting a financial advisor to see how much money you’re going to have coming in versus coming out, and where your money will best serve you over time.

Focusing on saving without direction

Many Boomers look at their 401k or their investments and think “250,000/500,000 dollars is a lot of money, I’m fine”. While this might be true, you need to consider how you live and how much continuing that way of living will cost. Do you know what % of your total savings you can withdraw per year? If you’re heavily invested in stocks or mutual funds, that absolute value of your nest egg can fluctuate.

A safer bet is to put money into guaranteed sources of income, like an annuity that pays out a percentage of interest that is fixed. You can withdraw more if you need to, but knowing you have a set amount each month means you can plan around that income.

Thinking they won’t live longer than their parents did

As we age, mortality is at the forefront of our minds, and retirement is kind of the “last milestone”. It makes sense that people might consider that their years are potentially going to be shorter from that point forward, but if you retire at 65, there’s a decent chance you have 20 more good years of life or more in your future. If you’ve only planned for 10, well, you might not have the money to cover your length of life.

With improvements in health care, cancer and heart disease detection and screening, and overall increases in lifespans, many retirees will see quality years into their 80s and possibly 90s. That’s both awesome and frightening if your finances aren’t planning for that.

Having no portfolio strategy

The stock market is confusing and with its volatility, investing your retirement in stocks can be frustratingly frightening. Not understanding how stocks can benefit your nest egg versus the relative safety of mutual funds and bonds can cost you a lot of money for the meager security it can offer. Again, this is a place where a financial expert can help you maximize rewards while still keeping equity risks in an anxiety-free range.

Not planning a will

Directions and final wishes are a huge part of passing away and one that shouldn’t fall to your grieving family to worry about. Having a clear estate plan, will and final directive will take this burden off of them while maximizing the amount of your estate that gets passed on. Start early to make sure you’re doing it without duress of sickness or the potential loss of mental faculties that accompany advanced age.

Retirement Strategies for Baby Boomers

Common retirement mistakes made by baby boomers and how to avoid them. Best practices for retirement planning as a mid-lifer.

Being underinsured

I’m not just talking about health insurance here, though that’s obviously a hugely important factor. You need to consider expanding your life insurance to cover end-of-life expenses and provide for your loved ones after you’re gone. In addition, there many other types of insurance that make sense for a retiring Boomer, including:

  • Funeral insurance – specific to funerary expenses like grave plot, casket, etc. This can often be quite inexpensive and provide for the entirety of costs associated with your death and burial
  • Long term care insurance – the fact that assisted living and nursing homes can be upwards of $5,000 a month means that this insurance can save you literally thousands upon thousands of dollars over the course of your life should you need these types of facilities
  • Loan insurance – this insurance is pretty niche but if you have a tremendous amount of money out in student loans or some other type of line of credit, it will cover them when you pass away. This can save your family from the burden of your debt being taken out of your estate.

Withdrawing their entire pension

Pensions are intended to pay out gradually over time, but of course you have the option of taking it as a lump sum. As with all things, though, taking a lump sum will decrease the total amount you get. While it can be beneficial to take the lump sum to pay off the mortgage or fix up the house, leaving it in as an annuity will benefit you in the long run in most cases.

If you can take the money out and buy an annuity outside of your pension that will pay out more per month, then that would be a prudent use of the lump-sum withdrawal. Otherwise, keep it where it is in most cases.

Planning makes perfect

Planning for expenses as well as income, understanding the role of a longer life in regards to your finances and making sure you’re well-insured are all steps that need to be considered when planning retirement. One of the best investments that Baby Boomers can make is hiring a financial advisor for their retirement; someone who can help forecast their monthly costs, where their money best serves them and how to plan to ease the burden of their passing on their families.

Financial uncertainty is a part of most of life, but the time when it really can’t be is retirement. Start right now to assess your financial needs in the future, and figure out where your money is and how you’ll be able to access it. Anxiety about money shouldn’t be part of your golden years, so don’t let it.

Still feeling a bit lost? No matter your age, book a no-cost catch-free call with me and I can offer customized advice to help you better your financial situation! Grab a spot here.

Have you found holes in your retirement plan that surprised you? Did we cover them here or should we add them to help others? Let us know in the comments – the better prepared we all are for retirement, the happier we’ll all be!