By | January 27, 2016

You’ve planned for retirement;Retirement Mistakes to Avoid but what if that plan goes sideways or something unexpected comes up to delay your plan – then what?  It’s important to be aware of common baby boomer retirement challenges, mistakes, and pitfalls and studiously avoid them.  While any one of these retirement issues alone may not put an end to your plans, several of them together may just delay or derail even the most thought out retirement plans.

What are some of the biggest retirement planning mistakes to avoid?


It’s a knee jerk reaction if “little” Johnny calls saying he needs an extra $500 this month to help cover an unexpected car repair bill.  We all want to help our children; we’re programmed that way (especially us moms)!  But “little” Johnny is a grown up now, so be careful not to share too much of your retirement funds to your adult kids.  After all, they are adults, and they need to learn how to fend for themselves and be better prepared.  Your children are better served if you’ve taught them to be independent, and they will thank you for it!

2. NOT DOWNSIZING.Should you downsize?

A large home can be a serious drain on your retirement savings, even if the mortgage has long since been paid off.  Liabilities to consider in keeping a larger vs. smaller home include higher taxes, insurance, utilities, maintenance on an older property, etc.  It can be hard to leave the family home due to cherished memories, but looking at the big picture, consideration should be made to a more economically, appropriately sized property.


It is not a good idea to have such a big chunk of your retirement savings being absorbed by a mortgage.  If your mortgage payments are low, this may not be a huge concern, but those payments may be preventing you from doing other things you may enjoy in retirement.  Consider a more affordable property that you can afford without taking out a new mortgage.

4. NOT PREPARING FOR MEDICAL EXPENSES.Medical Expenses in Retirement

Unfortunately, this is often out of our control because our health can change on a dime.  Some of the most serious medical conditions are either brewing without our knowledge or seemingly an instant onset.  The important thing here is to be prepared.  Make sure you have good coverage and don’t short yourself.  According to a recent Fidelity survey, couples in their mid-60s can expect to spend $245,000 on medical expenses during retirement.


Like medical expenses, this buster can erode one’s retirement nest egg in a flash.  Long term care insurance is available and at a lower cost the younger you get started.  This type of coverage isn’t for everyone, but it can help take the sting out of the staggering costs of long term care (e.g., in home care, assisted living, nursing home, etc.)


If we only had a crystal ball to know when these catastrophes would happen, our lives would be a lot less stressful.  However, if we get into good budget habits when we are young, then preparing for retirement will include a budget line item for these types of expenses.  Be careful not to rely on loans, because if you are on a fixed income, it may be harder to qualify for a loan, and the loan payments could also adversely affect your budget.  Better to have an emergency savings set aside for these unexpected expenses – just like you did (hopefully) when you were younger.


Many people try to manage their own assets in retirement.  Unless you have had some sort of financial assistance and guidance in the past, managing your own funds can lead to all sorts of problems, particularly running out of money.  Don’t let all of the years of saving for your retirement go down the drain.  Visit a financial advisor and have them help you plan how and when you take what payments from each asset.  You don’t want to come up short and be relying solely on Social Security!


It’s often been said, “we’ll spend less in retirement”.  But think about that.  With more free time, the natural tendency would be to spend more, not less.  You have more time to shop, travel, eat out, etc.  I don’t mean to sound like Scrooge; just don’t be careless.  Don’t overdo the trips or expensive golf outings.  Find ways to spend your time that fit within your means, so you can truly enjoy the freedom of retirement.

9. INVESTING TOO CONSERVATIVELY.How conservatively should I invest?

Nobody wants to lose money, and I’ve seen my investment nest egg take hit after hit due to downturns in the stock market over the years.  However, being too conservative can be risky as well.  You may come up short with regard to your retirement savings.  During retirement — each year you are using your retirement funds, but they should also be growing.  Be careful about limiting that growth too severely.  Take a few measured risks—but only with the guidance of your financial planner.


Many people think that they should withdraw their 401K money when they leave employment with a company. This happens more and more because workers today tend to switch jobs multiple times of the course of their careers, as opposed to our parent’s generation where it was more common to stay at the same job for 20-30 years before retirement.  By withdrawing early, you have just reduced the amount of money growing toward your retirement, not to mention triggering a taxable event.  Don’t do it!

11. NOT SAVING EARLY ENOUGH.Begin saving early!

Start saving as soon as you can for retirement. Unless you win the lottery or have a rich “old maid” aunt who will leave you her fortune, you are going to need to start saving for retirement long before you retire in order to live comfortably.  Plan ahead so you don’t have to work until you die.  Encourage your children to do so as well.


When Monday morning comes around, are you like me and wish you could retire this week? I don’t think I’m alone as many people dream of retiring early, in their 40s and 50s.  But the reality is that FEW, I mean FEW can afford to do so.  No matter how much you have saved, or how frugal you intend to be, retiring early can ruin your plans for a positive quality of life down the road.


Don’t leave your surviving spouse holding the bag so to speak. Be sure you have a policy that we will replace your income, or otherwise have a plan to make up the income he or she will be losing.  Costs for burial and funeral expenses are skyrocketing.  And, if you have a mortgage or other big debt and expenses, the loss of an income, even if it only Social Security can be crippling to the survivor.


Inflation can be thought of as the hidden tax on savings. Your dollar will not buy the same amount of things in the future as it does today.  You can’t control inflation, you can’t stop it or predict it, but you can stay abreast of it. Watch and follow the economic trends, and reevaluate your nest egg’s potential growth, and/or shrinkage, every year.


Making good decisions should be a lifelong goal, but let’s face it, bad decisions happen. What may seem like a good decision at the time, may, in fact, turn out to be just the opposite.  Be careful to obtain good advice from others you trust and from professionals who might know best.

These are just a few of the retirement issues for baby boomers that you may encounter in your retirement or pre-retirement years.  Hopefully you’ll be able to build a strong foundation moving forward and use some of the tips in this article to help you have a rewarding, enjoyable, satisfying, and relaxing retirement!


  1. Shawn

    I enjoyed your post on retirement. I’m no baby boomer but I certainly dream of retirement everyday. A valuable point that you make is the fact that many people continue to live in large homes. Watching an episode of House Hunters is good indicator of the homes some look for. One would think we live in a culture of giants. Keep writing, as I enjoyed it.

    1. David Hagstrom

      Thank you, Shawn. Yes, our culture seems to fully embrace the value “Bigger is better.” While living in a larger home may be fun, I do think it’s important for people to be aware of the potential tradeoffs they may be be making in terms of future income in retirement.

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