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.
No Emergency Fund
Unexpected and unfortunate things happen in the real world, which is a reality of life. In an ideal world, everything goes according to plan. However, cars break down, illnesses happen, jobs are lost, refrigerators stop working, etc. Imagine living without a fridge and having to buy fresh food daily in a busy world that is almost an impossible task.
Not Having Multiple Income Streams in Retirement
Successful retirees know to avoid mistake number three by putting all their eggs in one basket. A $1 million retirement plan can pay roughly $40,000 per year by following the 4% withdrawal rule. Combine this with the average Social Security benefit of $1,555 monthly or $18,660 each year, and the total is $58,660 annually. A married couple can do even better with about twice that amount.
Having Too Much Debt
A successful retiree knows to avoid too much debt. Debt should be paid down as a person approaches retirement. Debt like a mortgage, a home equity line of credit (HELOC), car loans, and credit cards should be paid off before retiring. 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.
Not Planning for Health Insurance