Retirement planning is more complex than ever for baby boomers. A 2023 study by the Employee Benefit Research Institute found that 43% of boomers risk outliving their savings. Avoid these common pitfalls to secure your golden years.
1. Underestimating Healthcare Costs
Fidelity estimates a 65-year-old couple will need $315,000 for healthcare expenses in retirement. Medicare doesn’t cover everything – factor in premiums, deductibles, and long-term care possibilities.
2. Ignoring Tax Implications
Withdrawals from 401(k)s and traditional IRAs are taxed as ordinary income. Strategize with Roth conversions and taxable accounts to minimize your tax burden.
3. Retiring Too Early
Every additional working year boosts Social Security benefits by 8% (up to age 70) and allows more savings accumulation. Consider phased retirement options.
4. Being Too Conservative with Investments
With longer lifespans, maintaining some growth investments is crucial to combat inflation. A 60/40 portfolio still makes sense for many retirees.
5. Failing to Create a Withdrawal Strategy
The 4% rule may need adjusting for today’s economic climate. Work with a financial planner to determine sustainable withdrawal rates for your situation.
Consult a certified financial planner to review your specific circumstances. Small course corrections now can prevent major financial shortfalls later.
