A quarterback sneak is awfully hard to stop when it’s first down and half a yard to go from the goal line, but it’s not a great idea when it’s 3rd-and-12 from your own twenty yard line. The point is that just because a play is right in one situation doesn’t make it right in every other. Finances are like that, too, and sometimes the assumptions we’ve been told for years aren’t necessarily correct.
We’re going to take a look at some money mistakes that different generations make based on some assumptions that don’t apply in all cases. First up is the Baby Boomers (stay tuned for the other generations in future articles).
Here are Five Fast Facts on money mistakes by Baby Boomers:
- 🧓 Who Is This? Boomers were born between 1946 and 1964. These folks are in retirement or very close to it. Yep, we’re jealous, too.
- ⛳ Where In The Journey? At this point, most boomers have completed their productive work life, or have at least cut way back on the amount of work they’re doing. They’re living more on pensions, savings, and Social Security than on income. They’re probably playing more shuffleboard than ever before, too.
- 💸 Assumption #1: Pay It Off - Paying off your house before going into retirement is generally considered a good idea. But…don’t get too aggressive with it! Interest rates right now are a lot higher than they were just a few years ago, and combined with inflation it means paying off the house might not be possible. Or at the least, it might be better to keep your cash in investments instead of paying down the mortgage because you’ll get a better rate of return over time.
- ✈️☀️ Assumption #2: Go Cheap - Conventional wisdom suggests selling your house in an expensive (often urban) area and moving to a cheaper place for retirement like Florida or Phoenix. And that’s still good advice, but make sure you do the numbers first. Some of those “cheaper” places have actually gotten a lot more expensive over the last few years. The concept is sound…just make sure your calculator agrees before you take action!
- 📈 Assumption #3: Stocks And Bonds - A rule of thumb has long said that folks should subtract their age from the number 100 and invest that percentage in stocks (with the rest going into bonds, a safer but more conservative investment). That worked great years ago, but nowadays we’re living longer and life is more expensive. So, you might need to keep more of your money in stocks in order to maximize the return for longer, which stretches out your money more. Instead of 100, subtract your age from 130.
🔥Bottom line: As with any financial advice, these tips may work better for some people than for others. Get with your financial advisor to put together the best possible plan for your particular situation. It’s particularly important if you don’t have regular income anymore (or won’t in the near future), so you have to make good, smart choices to set yourself up for the future as much as you can.
What’s the best boomer advice you’ve heard?
Let us know by connecting with us on Facebook and Instagram! Also, remember to share this newsletter with your friends & coworkers!
BTW, If you’ve read this far and haven’t yet signed up for the weekly Paycheckology newsletter, CLICK HERE!
