There’s one generation in particular that’s closest to retiring: baby boomers. As of 2024, boomers are celebrating birthdays between the ages of 60 and 78. This means they were born between 1946 and 1964. Today, more boomers are retiring than ever before.
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The Alliance for Lifetime Income (ALI) reported that 2024 marks the beginning of the “Peak 65 Zone.” It’s the largest surge of retirement-age Americans turning 65 in U.S. history. Over 4.1 million Americans will turn 65 each year through 2027 — that’s more than 11,200 every day.
However, here are four things that could derail retirement plans for the average boomer who plans to retire within the next decade.
Healthcare Costs
Boomers must be prepared to spend a lot of money on healthcare costs in retirement. According to Fidelity Investments, a 65-year-old retiring this year can expect to spend an average of $165,000 in healthcare and medical expenses throughout retirement. This figure is up 5% from 2023. Be sure to save early and often to prepare for increased healthcare costs as you age. It’s a smart idea to consider a tax-advantaged health savings account (HSA) to help cover healthcare costs later in life.
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Social Security Uncertainty
Social Security serves as a lifeline for many retirees. As highlighted by The 2024 Peak Boomers Impact Study, 52.5% of peak boomers have assets of $250,000 or less, and will rely primarily on Social Security as a source of income in retirement. Additionally, only 14.6% of peak boomers have assets of $500,000 or less, and most will struggle to meet their financial needs.
However, the fate of the Social Security system remains to be seen. As per the Social Security Administration’s 2024 OASDI Trustees Report, the current reserves will become depleted in 2035. Retirees should plan their finances now so they have alternate sources of income if the Social Security system collapses.
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Inflation
The past several years have been characterized by record inflation, due largely in part to the effects of the COVID-19 pandemic. The good news is that today, inflation is coming down. The U.S. Bureau of Labor Statistics reported inflation is down to 2.5% as of August 2024, which represents a three-year low.
However, history shows that there’s usually always inflation over time, an element you need to be prepared for once you call it quits at work. Consider working with a financial advisor who can help you inflation-proof your finances, so you can be prepared for economic ups and downs in retirement.
Where You Choose To Settle in Retirement
Once you stop working, you may be living on a fixed income. If you live in a high-cost-of-living area, you could be spending too much on housing. You may be able to save money by downsizing your home and/or relocating to a place with a lower cost of living. Where you choose to settle in retirement can mean the difference between being financially secure or not.
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This article originally appeared on GOBankingRates.com: 4 Things That Could Derail Boomers Plans To Retire In the Next Decade