Gen X and Boomers: 3 mistakes that are forcing you to retire after age 65

Wavebreakmedia/Getty Images/iStockphoto

Wavebreakmedia/Getty Images/iStockphoto

While retirement is the ultimate goal for many working professionals, no matter what age or demographic you may find yourself in, it’s not always possible to do so at the typical age of 65. In fact, two generations are retiring much later than age 65, forced into the workforce longer and later in life: Gen X and the Baby Boomers.

According to a recent survey by Off CivicScience: 61% of people aged 55+ say they won’t be able to retire by age 65, with many falling into the Gen X categories, they people born between 1965 and 1980 who are currently 44-59 years old and Baby Boomers those workers who were born between 1946-1964 and are currently between the ages of 60 and 78.

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While there are many factors and economic reasons why this trend is on the rise, some big mistakes that Gen X and Boomers made early in life are causing them to retire later. Several financial experts weighed in on the top three mistakes Gen X and Boomers are making that are pushing their retirement age past 65.

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Insufficient savings

Pensions, Social Security, and retirement plans are great, but they’re not available to everyone, and even for those who have access to these financial lines after work, they may not be enough to pay all the bills.

Many people underestimate how much they need to save for a comfortable retirement. They rely heavily on Social Security benefits, which are often insufficient, noted Prestizia Insurance founder John Crist.

For example, Ive had many clients who started saving late and didn’t take advantage of employer-sponsored retirement plans like 401(k)s, missing out on potential matching contributions, Crist recalls. To avoid this, younger generations should prioritize early retirement savings, automate contributions and maximize employer matches.

Inadequate financial planning

Failure to create a comprehensive financial plan is something that Gen X and Boomers have in common, which is hurting them in the long run. Inflation, rising health care costs and increased life expectancy are all contributing factors to pushing the retirement age of these generations past 65. That’s all in addition to neglecting or underfunding retirement accounts, which can often protect against changes in the economy and set people up for financial success in their post-work lives.

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I have seen numerous cases where individuals lost the employer match on their 401(k) plans due to inconsistent contributions, noted John F. Pace, CPA. This oversight can drastically cut into their retirement savings. Gen Z and Millennials should prioritize steady contributions to retirement accounts like 401(k)s and IRAs from an early age to take full advantage of compound interest.

I had a client who retired without a proper plan and had to go back to work because their expenses outstripped their savings. To prevent this, engaging with a financial planner to create a realistic budget, investment strategy and contingency plans is essential to ensuring long-term financial stability in retirement, Crist described.

Underestimation of long-term care costs

Another common issue that Gen X and Baby Boomers share is miscalculating long-term health care costs, impacting them later in life when more medical expenses and costs become routine.

Many individuals overlook the potentially high costs associated with long-term care, which can destroy retirement savings, recalls Marty Burbank, an expert in estate planning and elder law. I’ve seen clients who didn’t plan for these expenses end up draining their assets to cover unforeseen medical costs.

Crist noted how many Boomers and Gen Xers fail to plan for long-term care needs.

Medical expenses, especially long-term care costs, can quickly drain retirement savings. I’ve seen clients spend their entire nest egg in just a few years due to unforeseen health issues, Crist said.

To avoid this trap, Burbank recommended that younger individuals should consider investing in long-term care insurance or explore other savings strategies, such as health savings accounts (HSAs), to ensure they are prepared for potential healthcare costs down the road.

Future generations should consider long-term care insurance as part of their retirement planning. This can provide a safety net and preserve assets for other retirement needs, Crist added. By learning from these mistakes and taking proactive steps, younger generations can better prepare for a secure financial future, ensuring they can retire comfortably when they choose.

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This article originally appeared on GOBankingRates.com: Gen X and Boomers: 3 mistakes that are forcing you to retire after age 65

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