5 Crucial Retirement Mistakes Boomers Must Avoid

Today, Baby Boomers have a more challenging path to a successful retirement. In the past, a person worked for about 30 years and earned a pension that paid a percentage of their salary. When combined with Social Security, many retirees had enough income for a comfortable retirement.

However, less than one-third of Boomers today have access to pensions, making a comfortable retirement harder for many to achieve. Here are five mistakes boomers must avoid if they want to become successful retirees.

No Emergency Fund

The concept is simple. Put aside six to 12 months of expenses, and don't touch the money unless the unexpected or unfortunate happens. Most Boomers can save a few hundred to a few thousand dollars in a year.

Not Having Multiple Income Streams in Retirement

Adding to retirement income via a rental property income or building a passive income stream to live off dividends can help make a person a successful retiree allowing them to come closer to matching a significant percentage of their pre-retirement income.

If, however, a goal of zero debt is not attainable, then a person should pay down as much debt as possible before retiring and have a plan to reach zero debt.

Having Too Much Debt

Not Planning for Health Insurance

The reality for retirees is that healthcare costs will take up a significant portion of retirement income. A successful retiree avoids the mistake of not planning ahead for health insurance costs.

Most Boomers lack the expertise to evaluate and select mutual funds. Sometimes, they pick funds with too high expense ratios subtracting from their total returns. The result is a lower sum at retirement.

Investing Poorly

However, the large asset managers operating retirement plans have simplified the process. Passive index funds tracking the market or sector have low expense ratios. For example, a popular index fund, the Vanguard 500 Index Fund (VFINX), has an expense ratio of about 0.14%.

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