The Biggest Retirement Planning Mistakes Boomers Made and How to Fix Them

Breaking Up is Hard to Do

Divorce is impacting Boomers’ retirement plans. Twenty four percent of divorced Boomers are, or expect to be, worse off in retirement than if they had not divorced.  And, divorce by older Americans is increasing. The number of people over the age of 50 who divorce nearly doubled between 1990 and 2010.

Experts agree that divorce is financially difficult for Boomers.  Susan Brown, a sociologist at Bowling Green State University, says, “Individuals who go through gray divorce are considerably economically disadvantaged, and they are a growing demographic group.”

What You Can Do About It:  Assuming you are not going to work out differences with your spouse and stay married, you need to tackle the economic challenges of divorce head on to avoid some big retirement planning mistakes.  You will need to:

  • Arrive at a plan for dividing assets.
  • Make sure that all of the details are carefully managed.  For example, when splitting retirement accounts, you need to be extremely careful not to incur tax penalties.  And, don’t forget to update all beneficiary designations.
  • Plan for your own future.  Once there is a general understanding of who gets what, each party should create their own retirement plan to help them fully envision their new financial future.

Stand by Me (Your Financial Advisor)

According to a report from the Society of Actuaries, only 50% of baby boomers have worked with a financial advisor and even fewer meet with one on a regular basis.  However, the IRI study found strong evidence that financial advisors yield better finances:

  • At least nine in 10 Boomers who work with a financial advisor have retirement savings, a measure which has remained above 90 percent since the inception of the study in 2011.
  • More than eight in 10 Boomers who work with financial professionals believe they are better prepared for retirement as a result of that relationship.
  • Among the 55 percent of Boomers with retirement savings, 58 percent have saved $100,000 or more for retirement. When Boomers work with financial advisors this increases to 78 percent.

What You Can Do About It:  While it can be difficult to find a financial advisor that you trust, it is clear that they can help you have a stronger financial profile.

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