• Dave Anthony, CFP

The 3 Biggest Financial Mistakes Baby Boomers Make — and How to Correct Them

Updated: Aug 21, 2018

Attention, baby boomers: $1 million may not mean as much as it used to, but tens of thousands of you could lose that much or more over your retirement by making a few common financial mistakes — mistakes that are easily avoided.

Here are three ways baby boomers are not properly planning for their retirement, and how they can fix things before it’s too late.


A 65-year-old couple retiring today could easily face more than $615,000 in combined Medicare premiums and health care costs over the next 20 years. At the same time, Washington has already passed laws and regulations that will tax more Social Security benefits and impose severe Medicare Part B surcharges, fees and penalties on “affluent” baby boomers who haven’t properly planned for their retirement.

Solution: Get a detailed, honest analysis of what your projected health care expenses will be in retirement. Health care expenses vary by state, so make sure you are projecting the following, and doing so specific to where you live:

  • Medicare Part B, Part D and Medicare supplement premiums

  • Long-term care (LTC) costs and premiums

  • Office visits, co-pays and deductibles

  • Prescription costs


Once you retire and start living off your savings, things need to change. How you take money out of your retirement savings should be very different from how you put money in.

If you retire when the market is peaking, your investment returns while in retirement are likely going to be lower than those of someone who retires when the market has bottomed out. This is known as sequence risk, and baby boomers who are retiring when the market is near all-time highs should have a plan in place to protect their profits and avoid this risk.

Solution: Back-test your current portfolio — see how your current holdings would have performed in a market crash like that of 2008-09, and make sure you have steps in place to protect yourself.


Most boomers have a retirement plan, but a retirement income plan is different.

For most boomers, their investments are set up one way, their insurance another, and their tax preparer does just that — prepares their taxes. You want to integrate the three and find ways to optimize and synchronize everything. If you think you have a good plan, get a second opinion from an unbiased outsider.

Solution: A good Certified Financial Planner who does proactive tax planning with some advanced designations around retirement planning can show you how you can combine different accounts and take steps today to save hundreds of thousands of dollars in fees, expenses and taxes. Your plan should address the following:

  • Social Security optimization strategies

  • IRA/Roth conversion techniques

  • Trusts/ownership options

  • Mortgage analysis

  • Health care analysis

  • Investment analysis

  • Taxes

  • Fees and expenses

  • Inflation, market, sequence, longevity and interest-rate risks

Most baby boomers think they are prepared, but many are woefully uninformed about what could be done now to mitigate these risks. Take today’s 60-year-old boomer who is five to seven years from retirement. Is anyone talking to that person about how to set up a Health Savings Account, fund it to the maximum, invest it appropriately and use it as an LTC-type plan 20 years down the road?

Then there’s the money wasted by not paying attention to excess fees. The average boomer’s 401(k) that is invested in mutual funds is paying more than 2% in fees and expenses each year. If you could shave 1 percentage point off that, it could save you more than $225,000 over the next 20 years.

On the topic of retirement accounts, most boomers will simply defer their IRA and 401(k) accounts until they have to take their required minimum distributions at age 70½. Then they get hit with the tax torpedo, where all of that IRA income is ordinary income, and it causes their Social Security to be taxable and could bump them up to the next bracket for higher Medicare Part B premiums. Tax brackets are at some of their lowest levels ever now, so put together a smart plan to do some Roth conversions.

By taking some of these steps, baby boomers can actually have the retirement they hoped for.

If you'd like our helpnavigating these critical steps to retirement, contact us today.

At Anthony Capital, we offer comprehensive, integrated financial planning and wealth management services.

Our clients benefit from the combination of our mathematically-based investment management strategies and the application of time-tested financial planning principles.

Blending sound money management techniques with intelligent tax, estate, and insurance planning, creates truly unique financial planning outcomes for our clients. 

(This article by Anthony Capital's David M. Anthony, CFP®, RMA was featured on NerdWallet)

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