Correcting the Baby Boomer Blunders

Boomers Beware

There are a number of financial mistakes that everyone is susceptible to making sooner or later.

The good news is that these mistakes can be fixed before it’s too late.

Right now there are millions of Americans on the verge of retirement. This is especially true of those who were born between 1946 and 1964–better known as the Baby Boomers.

As they get ready to explore the new horizons of their golden years, far too many of them are still working hard to build their nest egg. They are determined to avoid outliving their savings during retirement.

Many of these individuals suffered as much as 40% losses to their traditional plans such as IRAs and 401(k)s during the lost decade of 2000-2010.

In the last 5 years, many have recovered their losses and made a little headway but now they fear they’re about to suffer significant losses again due to another recession in the next 3 years.

That’s a legitimate fear.

They worry about becoming dependent upon family at a time when they’d rather be enjoying their independence from the stresses of their working years.

Whether everyone will have enough money to retire is the looming question for 78 million Boomers. Because of a volatile economy, many of them will not have enough money to meet their needs, let alone their wants, in retirement.

The harsh reality is that the average Baby Boomer has less than $100,000 accumulated for retirement. This means many have far less than that amount.

They know that Social Security won’t save them but they’re not sure what to do.

Many Boomers are confused. They feel isolated and powerless and they fear that it’s too late to plan for a comfortable retirement.

Many are concerned that they haven’t saved enough and that they may outlast their retirement resources. They’re also concerned that their nest eggs are draining faster than they anticipated.

What’s more, many are worried that taxes, inflation, and the cost of health care will quickly deplete what they have set aside.

How did this happen?

It’s usually due to a mixture of bad habits and following one-size-fits-all financial advice which led them to put their hard-earned cash in places that have been vulnerable to economic downturns.

They’ve perpetuated what Doug calls the Baby Boomer blunders.

15 Blunders to Avoid

No matter what your age is, it might be wise to reflect on how many of these blunders apply to you.

  1.  I’ve saved only 1-3% of my income instead of 10-20%.
  2. I’ve borrowed to consume rather than to conserve.
  3. I’ve paid off my house by sending extra principal payments to the mortgage company and my house went down in value in 2008 and has only recovered the value it had 8 years ago. It might depreciate in value again.
  4. I’d love a vacation condo or cabin but can’t afford one yet. I’m waiting until I retire to buy it.
  5. I’ve bought and sold investments at the wrong time out of emotion more than logic.
  6. I’ve not matched the right investment vehicles with my objectives.
  7. I’ve tried to time the market to get ahead faster.
  8. I’m at risk in the market rather than linking my investment returns to the market to preserve safety of principal.
  9. I’ve paid too much for insurance rather than letting Uncle Sam pay for it.
  10. When I focus on my comprehensive balance sheet, I concentrate on the least important category (money) versus the most important assets (family, health and values).
  11. I’m not sure I understand the three marvels of wealth accumulation which are compound interest, tax-free accumulation and safe, positive leverage.
  12. After working all these years, I’m wondering what it was all for. Was I just following the herd?
  13. As a business owner, my exit strategy has pretty much been counting on somebody buying my business. Now I fear the new owners will not run my business as profitably as I’d hoped and I may have to come out of retirement to salvage my business.
  14. I’ve spent a lot of my health accumulating my wealth. Now it seems like I’m going to be spending a lot of my wealth trying to regain or preserve my health.
  15. I want to perform philanthropic, humanitarian or religious service and be charitable with my time, talents and money. But I’m concerned that if I leave America for a while, my financial wealth will be eroded away with increased taxes, inflation and continued market volatility.

If any of these blunders sound familiar, take heart. You’re not alone.

Millions of Americans have committed them at one time or another. The good news is it’s likely not too late to fix these blunders.

It will take financial discipline. It will help to understand the difference between the three lodging places for your money: low risk, moderate risk and high risk vehicles and how you can protect yourself from that.

You’ll be able make up ground even faster when you’ve mastered the 3 marvels of wealth accumulation mentioned above.

You’ll need to give due diligence to identify the best combination of proven financial vehicles. As you do these things, you’ll gain clarity, confidence, focus and balance as you move towards an abundant retirement.

Start by visiting with a wealth architect today.