Are you a baby boomer? If so, you may already be retired. Even if you are still working, retirement is just around the corner. No matter your current situation, it is important that you avoid the retirement mistakes that have plagued so many people before you.
Several Baby Boomer Retirement Mistakes To Avoid
Underestimating how long you will live. In the past, financial planners advised people to plan up until the age of 85. In this day and age that is a mistake. People are living longer than ever, and you may make it well into your 90’s or beyond. It is important that you don’t blow all your money early in retirement because you think you are going to die early – this is a risk that you should not be willing to take.
- Assuming you will be able to work as long as you desire. Many baby boomers think that they will continue to work, even though they are past retirement age. But guess what? Things don’t always work out that way. For some, bad health forces them to retire sooner than expected. In turn, all of the income associated with that job is also gone.
If you are hoping to work into retirement, don’t count on that money because you may never see it.
- Consider the cost of health care. Believe it or not, some people do not check on health insurance premiums until they retire. This is one of the biggest mistakes that you can make. It is important to know how much money you will be spending on health insurance and related costs after you retire.
Remember, you cannot get Medicare until you are 65. Even then, there are expenses that this program does not cover. Many experts agree that a couple will need $200k to cover medical expenses after retirement. You should be planning your retirement with this number in mind.
Locking in a poor investment vehicle. This is commonly done with annuities and certificates of deposit. Generally speaking, the rate attached to a CD is not going to be any higher than that of inflation. If you lock your money into one of these products, you are going to have to wait to access the funds. Plus, during this time you will be receiving a poor return on your investment.
Withdrawing too much, too soon. Year after year, many baby boomers make the same mistake: they begin to withdrawal too much money, and soon enough find that they are running out. Most agree that a three to four percent withdrawal rate is proper. Of course, you have to consider your financial situation and the money that you need to live. It is better to play it safe than to withdrawal too much, too soon.
For a better future, you should do whatever it takes to avoid these five common baby boomer retirement mistakes.