12 Common Money Mistakes Made by Boomers Entering Retirement

Written By Tracy Chesterson

Are you approaching retirement and hoping to make the most of your golden years? We’ve compiled a list of common financial mistakes many boomers make before or during retirement. Let’s explore and learn how to steer clear of them for a smoother financial journey in your post-working life:

12. Not Factoring In Healthcare

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Yes, you may spend less money on expenses such as housing when you retire, especially if you downsize. But don’t forget that healthcare will cost you more as you age. Do the math in advance by checking out insurance premium prices at all the ages you hope to reach in the future before quitting that full-time day job.

11. Not Counting Your Spouse

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If you’re married, then you need to consider – together – what you’ll need to live on during your later years. It’s also worth thinking about what would happen if you and your spouse separated. Would you lose a big chunk of your retirement income due to the divorce settlement? Unlikely though that may seem, life does happen, and it’s worth preparing for all eventualities. 

10. Forgetting About Inflation

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With worldwide inflation at all-time highs during recent years, you really do need to factor in inflation. Prices go up – and up – and very rarely come down. How much you’ll realistically need to live in a decade’s time may be vastly different from how much money you need to live right now. 

9. Making High-Risk Investments

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Traditional financial advice from a qualified, experienced expert can go a long way. Shun get-rich-quick schemes in favor of making sound financial investments. Dull it may be, but stable has far more chance of securing your long-term financial future. 

8. Ignoring Taxation

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A wise man (Benjamin Franklin, some reckon) once said there were but two certainties in life – death and taxes. So don’t forget about what you might owe your local revenue service in tax during retirement, wherever you choose to live. Forget about this one and you could be a whole lot worse off than you thought. 

7. Not Using Your Employer Match

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Also part of the 401(k) scheme is the employer match. This again gives you free money, in essence, as your employer will contribute a percentage of your salary to the pot. 

6. Missing Out On Free Money

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If there’s a 401(k) scheme available via your employer, make sure you use it! It’s not taxable while the funds are growing. As every contribution is made before tax, you also reduce your tax burden for that financial year. It’s basically free money, to which you’re fully entitled.

5. Stopping Saving

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If you’re saving for retirement and can afford to carry on doing so, don’t stop. You can use extra money at any time of your life. Even if you’ve been fortunate enough to reach your target, more cash will always come in useful. When you do have some money to spare, you could always spend this on ticking off your bucket list, treating your family, or anything else you want to. 

4. Cashing In Too Early

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While it’s tempting to retire as soon as you can, do so at your (financial) peril! Cashing in even part of your retirement pot before you reach the age of 59.5 could mean losing a considerable percentage in fees and taxes. Consider waiting a little while longer if it’ll save you that kind of cash. 

3. Quitting Work Too Soon

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Don’t quit work too early. Instead, take a long, hard look at your financial position before taking that big leap of faith. Do you really have enough saved for the retirement you want, for starters?

Also in the mix here might be funds that your employer invests on your behalf. Staying a little longer could pay dividends. Particularly if you need to stay with your employer for a qualifying period, before you’re able to reap certain rewards. 

2. Failing to Clear Debt

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If you see retirement as a fresh start – your time to do with as you please – then the last thing you need is to be saddled with debt that’s leftover from your working days. 

From the mortgage to the loan you took out for that once-in-a-lifetime holiday or household emergency, paying off all existing debt is the best way to enter retirement with a spring in your step. 

1. Zero Retirement Planning

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Whether you started early or are late to the game, planning for your retirement is a must. How else are you going to ensure all your basic needs – such as housing, fuel, food and clothing – are taken care of? And more to the point, how on earth are you going to enjoy your retirement, if you’ll be scrimping and scraping all the way? 

Put in some legwork now, and you’ll reap the rewards during your later years. 

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