The Ultimate Baby Boomer Retirement Investment Guide [Updated for 2022]

I hate to tell you this, but, before we even begin looking into Baby Boomer retirement investments, let’s face the facts - Baby Boomers are currently experiencing a retirement crisis.

Yes, that’s the truth. And I know how it feels because we’ve worked with countless Baby Boomer retirees. People born between 1946 and 1964 have been complaining about coping with the high cost of healthcare, their shockingly limited retirement savings, and the hopelessness that comes with unrealistic retirement expectations.  

Do any of these sound familiar?

Well, they probably do, and research studies are confirming that the problem is much more widespread than we previously assumed.


According to the Insured Retirement Institute, 55 to 73-year-olds (the Baby Boomer generation) are indeed retiring in droves. The organization’s annual report, Boomer Expectations for Retirement, places the current retirement rate at roughly 10,000 people a day.

And so far, about 47% of Baby Boomers have already retired. That represents nearly half of the current Baby Boomer population in the U.S.

They’re not happy though. And neither are the ones who are yet to join them.
Retirement, which previously was the one thing we all looked up to, is now a
much-dreaded life stage. 

So dreadful that, get this, only 24% of working Baby Boomers are planning to retire before they hit 65. A whopping 26% of them admit they’ll only consider retirement when they’re past 70 years of age.

If you find that surprising, this will knock you off your feet. 13% of them don’t even know when they want to retire, and 8% have already resigned themselves to the fate of never retiring.

Planned Retirement Age. Source: Insured Retirement Institute

What's to blame? A poor economy? 
The great recession of 2008 maybe?
Or is destiny just not on our side?

Well, going by IRI’s report, poor planning is the principal reason behind these problems. It turns out Baby Boomers are exceedingly retiring with unfeasible expectations and insufficient savings.

None of the three core foundations of retirement are doing well. Personal savings, private pensions, and social security are all in pretty bad shape.

Only 23% of Baby Boomers aged between 56 and 61 have a private company pension plan that will give them some income. Then when you factor in even the non-private plans, it turns out only 38% of Baby Boomers are looking forward to a pension.

But, let’s get one thing clear. This is not a motivational book, and neither is it one of those
sell-off pieces with “secrets” to “getting rich quick”.

Rather, it gives genuine and practical retirement investment advice to Baby Boomers. Our vastly experienced team of finance experts here at TheTradersWire has, for years, been conducting extensive research on how Baby Boomers can make their money work for them. Then using the resultant findings, we’ve compiled the ultimate Baby Boomer retirement investment guide with tried, tested, and proven strategies.

It walks you through the weaknesses and strengths of the 5 top retirement investing opportunities, 9 fast-track tricks that selected Baby Boomers have used to turn their investments into retirement success stories, plus 7 of the costliest mistakes that could possibly derail you along the way.

So, in short, this is the guide for you
if you've been wondering:

How to invest for retirement.

How to invest retirement money after retirement.

How to invest money for retirement.

How to invest in retirement.

How to invest for retirement at age 60.

How many Baby Boomers retire each day.

How much to save for retirement.

Where is the majority of retirement money invested?

Where to get the safest retirement investment returns.

Where to get better retirement investment returns.

Now, to put all that into context, let’s start off by evaluating the situation at hand.

How much retirement savings do Baby Boomers actually have? How do you compare? And can your little retirement savings possibly generate decent investment returns?


Table of Contents

Chapter 1: Finally Revealed- How Much Are Baby Boomers Saving For Retirement? How Do You Stack Up?

To settle the debate about retirement savings, a finance reporting organization called GOBankingRates recently surveyed more than 2,000 Americans through Google Consumer Surveys. And the results, sadly, reveal the grim reality of how bad our retirement savings are, and how we desperately need solid retirement investment ideas.

 The report, which was published in January 2019, covered both men and women across the three main age groups - Baby Boomers, Generation Xers, and Millennials. They were all asked how much they had saved for retirement, and the subsequent answers were a bit shocking.

America, as they say, is the land of opportunity. But, surprisingly, 46% of the current working population has nothing- not even a dollar- put aside for retirement. That’s nearly half of Americans aged 18 and above.

Very interesting, I must say.
But where does that place the rest of the population?

Well, apparently, not very far off it seems. 19% of the respondents admitted that they’ll be retiring with less than $10,000, while only 20% can manage retirement savings of between $10,000 and $100,000.

This, in other words, means about 64% of people working in the U.S. will retire broke, with almost zero retirement savings.

Sounds unbelievable?

Ok, in that case, here are figures from another research study- one that was conducted a year earlier by the Employee Benefit Research Institute in conjunction with Greenwald and Associates.


They subsequently published a report called The 2020 Retirement Confidence Surveywhich goes beyond just the respondents’ retirement savings. The institute evaluated retirement savings along with household savings and investments, after which it established that 35% of working Americans have a total net worth of less than $25,000.

Now, with that in mind, consider this

- according to data published by the Bureau of Labor Statistics, retirees aged between 65 and 74 need about $48,885 on average every year. 55 to 64-year-olds, on the other hand, spend $56,267, while people of ages 75 and above average at around $36,673 per year.

So, in essence, more than 45% of working Americans cannot

afford to survive through retirement.

Average Retirement Savings For Baby Boomers

With the bulk of Baby Boomers being on the verge of retirement, you’d expect them to be a bit more concerned about their savings than the younger generations. But, interestingly, the statistics prove otherwise.


Still on the January 2019 report by GOBankingRates, it just so happens that 42.1% of Americans aged between 55 and 64 are not particularly concerned about their retirement savings. So, it’s only safe to assume they probably wouldn’t be interested in retirement investment opportunities either.

But, it doesn’t end there.

Things are seemingly getting worse with age, as 49.9% of the respondents aged 65 and older said they’re not concerned about their retirement savings.

On the brighter side, however, about 57.9% of 55-64 year-olds are of the contrary opinion. They are very concerned about their retirement savings. But, here’s the kicker. Despite the concern, 44.2% of this age group feel that they are incapable of saving more. Only 13.7% of them are showing concern while planning to increase their retirement savings.

Why's that so?

Well, based on our interactions with Baby Boomers, we admit there are many possible reasons why Baby Boomers’ retirement savings are dwindling. They vary from one person to another.

However, there’s one specific reason that stands out above the rest, and many agree it greatly influenced how they save and invest for retirement.

Yes, that’s right,

I’m talking about the Great Recession of 2008. And more specifically, the stock market decline that occurred between 2008 and 2009.

We witnessed a lot of panic selling, which sent ripples through the entire finance industry. The Dow Jones itself plummeted way below 10,000 points, subsequently decimating numerous retirement accounts. 

The losses were quite devastating, to say the least. In fact, the 2008 crash was so traumatizing that it took several years for Baby Boomers to begin re-investing.

And for the few that did, the returns were not that encouraging within the next 7 or so years. Retirement savers were advised to put their money in bond funds, but the subsequent yields were poor.

So, in essence, Baby Boomers began retiring amidst low market interest rates and plateauing wages.

That said, research findings by the Insured Retirement Institute should come as no surprise. 45% of the Baby Boomers surveyed admitted they didn’t have retirement savings.

But, on the flip side, about 55% have been able to save some money for retirement. And, as it turns out, only 28% of the savers have less than $100,000 in their retirement accounts.

Now, let's take a step back

And compare these findings with the figures published by GOBankingRates. Notice anything interesting?

Well, it turns out the reports are almost in perfect sync with each other. IRI, for instance, has 45% non-savers while GOBankingRates places unconcerned Baby Boomers between 42% and 49%.

Then when it comes to savers, IRI states 55% while GOBankingRates averages around 57%.

With that confirmed, let’s now dive deeper into the savers to establish the average amount Baby Boomers are holding.

The TransAmerica Center for Retirement Studies provides the answer through its 21st annual report edition published in November 2021. After surveying a myriad of workers across the US, it placed the median retirement savings amount for Baby Boomers at $152,000.

Are Baby Boomers Saving Enough For Retirement?

$152,000 in retirement savings might sound decent at first, but here’s the thing about Baby Boomers. They don’t die young.

According to data analysis carried out by the Population Reference Bureau on Aging in the United States, Baby Boomers are expected to live till the age of 81.1 years for women, and 76.1 years for men.

What does that mean?

Well, with all these figures, you won’t need a specialized retirement savings calculator to estimate how much you’d need to survive over the long haul.

The report by IRI shows that the retirement ages for most Baby Boomers stretch from slightly before 65 to 69 years. This accounts for a combined fraction of 53%.

Now, let’s cross over to the annual retirement costs we’ve mentioned. 55 to 64-year-olds are spending $56,267 per year, while 65 to 74-year-olds need $48,885. Then beyond that, it goes down to $36,673.

So, how much do you think you’ll need to live comfortably during retirement?

Well, of course, it’s certainly nothing close to $152,000. The total average figure goes beyond $500,000. Therefore, even when you add the average social security benefit of $14,000 per year, you’ll still have a huge deficit to offset.

And with that in mind, you should now be able to tell how you stack up based on your retirement savings.

For most people, however, there’s no two ways about it. They can only be assured of a comfortable retirement if they leverage solid investment opportunities.

Luckily for you, this guide has proven actionable retirement investment advice for Baby Boomers.

But then again, how do you even reach your retirement savings goals? Is there any specific formula you could use to save just enough to venture into various Baby Boomer retirement investment options?

Chapter 2: The Proven Rules of Saving For Retirement

“Save as much as you can”- that’s what most people would tell you.
Financial planners, on the other hand, would typically advise you to reach your Baby Boomer retirement goals by consistently saving about 10%-15% of your income.

Fair enough. But, these are just basic guidelines for managing your finances. If you want to assure yourself a comfortable retirement, you’ll have to go beyond the basics and apply a more strategic savings plan. One that can ultimately give you enough cash to pursue the best retirement investment options for Baby Boomers.

And how much are we talking about here?

Well, technically, you should save and invest enough to generate a retirement income of at least 80% of what you earned before retirement. So, if you have a pre-retirement income of $200,000 per year, your retirement savings and investments should give you about $160,000 per year if you intend to live comfortably.

According to a survey conducted by

Shwab Retirement Plan Servicesindividuals with a 401k pension account quote $1.7 million as their target retirement savings amount. But, rather unsurprisingly, most of them are not on track to get there.

Average :
$1.7 Million

Amounts Required For Retirement. Source: Shwab

So, how exactly do you establish if you’re on the right track?
Well, turns out there are different formulas you could use to find out the precise retirement amount you should have saved at different stages of your life. 

Retirement Savings by Age

Setting your retirement savings goals based on age is a very effective approach since it helps you track your overall progress with time. Otherwise, you stand to compromise your retirement if you’re uncertain about the savings you should accumulate over the years.

That said, a renowned investment brokerage firm called Fidelity extensively analyzed the matter and came up with formulas you could use to save enough money for retirement.

They considered multiple financial factors, including the spending habits of American workers, retirement pension schemes, the lifestyles of retirees, as well as the popular retirement investment options.

A word of caution though. Don’t take the milestones as rigid financial principles that you must adhere to. They are barely guidelines you could use as benchmarks. So, don’t be too hard on yourself if you fail to meet all of them.

Percentage of Your Salary Formula

Now, to develop a solid savings plan based on your salary, Fidelity considered Social Security Benefit Calculators, IRS tax brackets, individual income tax statistics published by the IRS, as well as the Consumer Expenditure Survey reports.

It then simulated varying market scenarios according to historical economic data, while assuming the worst possible market conditions to increase your chances of success.

One of the assumptions, for instance, is that the retiree won’t be expecting a pension income.  Fidelity further assumes a pre-retirement wage growth rate of 1.5% per year, from the age to 25 to a retirement age of 67.

Hence, if you started saving about 15% of your annual income when you were 25, you should ultimately retire at 67 with retirement savings worth 10 times your annual income. Possibly much more if you put your money in low-risk retirement investment options like stocks. (We’ll cover that in full shortly).

All in all, regardless of whether you’ve been investing or not, your retirement savings should be equivalent to 8 times your annual gross salary by the age of 60, and at least 6 times by the age of 50.

If you’re nowhere close to that, you might want to take our Baby Boomer retirement investment advice very seriously.

It’ll help you form a solid plan that could potentially grow your retirement income quite astronomically before it's too late.

That’s not to say, however, that Baby Boomers who’ve met the milestones are exempted. Retirement savings that are worth 10 times your pre-retirement salary will eventually translate to fairly limited retirement income.

Fidelity says its retirement savings benchmark can only push you as far as 93 years of age. And that’s not the only caveat. To reach that age, you’ll have to restrict your annual retirement expenditure to 45% of your pre-retirement yearly salary.

So, whichever way you look at it, retirement investments are critically important if you intend to live comfortably during retirement

And if you can’t develop the habit of saving more, you have no choice but to earn more through investments.

Come to think of it though, the whole issue of investing even after retirement begs yet another question- how much should you withdraw from your retirement investment account every year?

Or, in other words, is there a standard rate of withdrawal that will give you a steady retirement income stream without compromising your long-term retirement investments?

The 4% Rule of Retirement Investment Returns

Now, as strange as it may seem, the safest withdrawal rate for Baby Boomer retirees who’ve invested their retirement savings is 4%. Experts, as a matter of fact, even call it the 4% Rule of Retirement Savings.

You see, by consistently withdrawing no more than 4% of your investment interest and dividends, you should be able to maintain a perfect balance between your retirement expenditure and investments. So 4%, in short, is the sweet spot if you intend to keep a constant flow of retirement income.

The 4% Rule. Source: FIWith2Kids

This rule was established after thoroughly analyzing historical information on bond and stock returns, stretching from 1926 to 1976. However, it was not until the 90s that experts started recommending the 4% withdrawal rate.

Before then, 5% was widely perceived to be a fairly solid bet for retirees. But, it was eventually changed in 1994 after an acclaimed financial advisor named William Bengen made an important discovery.

He comprehensively reviewed the stock and bond returns in 1994, while referring extensively to the drastic downturns that had been experienced in the previous years. His analysis particularly singled out the trends that shaped the market in the early 70s and 1930s, after which 5% proved to be a rather unsuitable rate.

In the end, William proposed the 4% rule based on his findings that with such an annual withdrawal rate, you’ll keep your retirement portfolio for at least 33 years. It protects your Baby Boomer retirement investment funds from all possible market outcomes.

What’s more, you’re allowed to adjust the rate based on inflation.

While 4% is a pretty decent rate to maintain over the long haul, a Baby Boomer retiree with a basic investment portfolio can afford to go slightly beyond that.

You could, for instance, increase the rate by 2% every year to account for annual inflation. This will help you cushion yourself against the rising cost of living.

But, make no mistake about it. The 4% rule isn’t ideal for every single Baby Boomer who ventures into retirement investing.
If you’re dealing with high-risk investment options, for instance, a constant withdrawal rate of 4% doesn’t guarantee anything per se. Your retirement investment portfolio will still face a significant risk of sudden collapse due to possible market downturns. So, it’s always a good idea to bank on the low-risk options. 

And while you’re at it,

 you can’t afford to suspend the rule. Not even once. Stretching beyond the inflation allowance would eat into your investment principal, which would then translate to a chain of lower interest returns year in, year out.

All things considered, therefore, breaching the 4% rule on one occasion could ultimately cost you everything down the line.

But, don’t get me wrong. The 4% rule is not compulsory for everyone. You can still sustain solid investment returns without necessarily relying on it. I’m just saying that if you choose to apply it, you have to abide by its accompanying principles over the long haul.

Chapter 3 - Retirement Savings Accounts vs. Retirement Investment Accounts: Which Option Pays Higher Returns?

Although the point of this guide is exploring the top retirement options for Baby Boomers, let’s look at both sides of the coin.

On one hand, we have retirement savings accounts while, on the other, there’s the option of converting the savings accounts into retirement investments.

Now, guess what? It turns out that most people prefer saving as opposed to investing. 64% of the people surveyed by Schwab in the research study we’ve mentioned claimed they consider themselves as savers, not investors.

Consequently, 54% of individuals on 401(k) plans end up putting their retirement savings in actual long-term savings accounts. Only a minority go for the alternative option of retirement investment accounts such as health savings accounts (HSA), brokerage accounts, and Individual Retirement Accounts (IRA).

Why is that so? And what’s the difference between these approaches in the first place?

Retirement Savings Accounts

Saving, to begin with, means putting funds aside for future use. And in this case, we’re talking about setting aside a part of your regular income in a savings account for use during your retirement period. 

But, make no mistake. A 401(k) isn’t just a savings account. Rather, it’s intended to direct pre-tax contributions from your employer to various investments with tax benefits.

So, for you to qualify as a saver, you have to leave your retirement funds in a dedicated savings account.

Not such a bad plan, especially since saving is the safest way of keeping your money. It remains unaffected by market downturns and other investment risks. The only thing that might impact your retirement savings is inflation, which currently averages 3.7% per year.

Other than that, you can expect to find your retirement funds intact. Savings accounts operate under lower risks than investment accounts.

Ok, fair enough. But, here’s the kicker. Savings accounts typically pay lower interest rates than investment accounts. Reduced risk translates to lower returns. And to make matters worse, some savings accounts don’t pay any interest at all.

You essentially get just the principal amount you had saved.

Retirement Investment Accounts

Instead of keeping funds idle, retirement investment accounts put your money to work. You get to buy assets such as mutual funds, bonds, and stock, from which you generate returns over a prolonged period of time before retirement.

It doesn’t stop there though. Retirement investment accounts can potentially generate additional returns long after you’ve retired. It all depends on what you choose to invest in, plus the corresponding maturity dates and rates.

A 401(k) is a good example of a retirement investment account that Baby Boomers could leverage.


Alternatively, you might choose to proceed with an Individual Retirement Account (IRA). What you end up earning depends on the type of investments you choose to venture into. 

But, all in all, retirement investment accounts enjoy much higher rates of return than savings accounts. Although they expose your retirement funds to more risk, they’re quite rewarding.

You just need to identify the most promising investment opportunities and then approach them with finesse.

Want to find out how? Proceed to Chapter 4....

Chapter 4: 5 of the Best Low-Risk Retirement Investment Options for Baby Boomers That Could Make You Rich

Annuities: Make Money From Insurance Companies

What Are Annuities?

Annuities are special investment contracts between you and an insurance company. In essence, you’re supposed to purchase a policy, and the insurance company will proceed to issue a guarantee for fixed or variable returns.

The payment of the returns could begin immediately, or the insurance company could withhold the funds for a specified period of time. It all depends on the terms you set with the insurance company you invest with.

Now, for the sake of clarity, there are two types of annuities you could proceed with:

Immediate Annuity: This one entails putting your retirement funds into an insurance company, which then begins to issue returns right away in regular monthly remittances.

The amount, however, doesn’t have to be fixed. While most Baby Boomers would typically prefer receiving a constant amount, you could choose to have the insurance company pay you in variable remittances. Hence, the precise figures would be dictated by the company’s overall performance.

Deferred Annuity: Deferred Annuity is the opposite of Immediate Annuity. Instead of receiving instant payments, you’ll continue investing funds over a specified period of time. Then after your investment has grown, the insurance company will release the returns as stipulated by the contract.

Typically, Baby Boomers investing in Deferred Annuities prefer holding off their returns until they retire. This gives their investments ample growth time and much better return rates than Immediate Annuities.

That said, there are three varying types of Deferred Annuities:

Fixed Deferred Annuity: You invest your retirement funds in lump sums and the insurance company directs everything to a low-risk investment portfolio with a fixed rate of return. Earnings are then compounded annually for several years until retirement.

Variable  Deferred Annuity: After putting your money into bonds and stocks run by an insurance provider, your returns will be calculated based on the performance of your portfolio. Although this increases the amount of risk, it substantially boosts your earning potential.

Equity-Indexed Annuity: The returns here are based on a wide range of stock options, and your insurance company manages to cover you against the corresponding risks by issuing a minimum return guarantee.

How to Invest In Annuities

The process of investing in Annuities is pretty straightforward.

  • You begin by searching for a suitable annuity provider from credit rating agencies. Standard & Poor’s and Moody’s, for instance, provide accurate insights into what you should expect from various providers.

  • Compare the ratings of various providers before making a selection.

  • Once you choose a well-performing provider, you can proceed to make an application via phone, mail, or digitally through the web. The insurance company will specify the channels it supports.

  • And while you’re making the application, remember to lock out the payout rate by using what providers call “in good order”. This should confirm that you’ve included all the required details, subsequently saving you a prolonged processing period.

  • The annuity provider will then request funds after accepting your application via “In Good Order”. But, in other cases, you might be required to submit the funds along with the initial application.

Average Performance of Annuities

By now, I guess you’ve figured out that annuities operate pretty much like stock investments. There are countless options you could look into, and their corresponding returns can vary quite extensively, especially when they’re spread out over a long period of time.

That notwithstanding, I’d say the market in 2022 is seemingly attractive, particularly when it comes to fixed annuities.
And by that, we are referring to annuities that apply a predetermined rate of return over a specified period of time. Then once the guarantee period lapses, you can proceed to liquidate your investment.

Now, when you begin trading, you’ll notice that fixed annuities popularly go by the name MYGAs, which basically stands for Multi-Year Guaranteed Annuities.

So far, one of the best performing MYGAs is Atlantic Coast Life, which is a B++ rated asset. It managed an average return rate of 4.00% per annum over a term of 10 years.

But, if you’re the type that would prefer a maturation period of 5 years, you could expect something like 3.87% per annum. This is the average return rate of American Life, which is yet another B++ rated provider.

And if you intend to make some withdrawals from time to time, you could consider an asset like SBLI, which happens to have a rating of A. It enjoys an average annual return rate of 3.10% over a term of 5 years.

That said, here are some of the most notable rates of fixed annuities, as published by BluePrintIncome.

Fixed Annuities Return Rates.

The Benefits of Annuities As a Retirement Investment Option

Tax Deferral On Your Investment Returns: While quite a number of investment options are taxed annually, annuities are exempted until you withdraw your money. So, your investment earnings should remain intact. 

● No Amount Limits: You want to place millions of dollars into annuities? Well and good. The government does not regulate the amount of money Baby Boomers can invest here.

● Multiple Investment Options: Most annuity providers offer a dynamic range of options to invest in. You could, for instance, pick an immediate annuity with variable returns, or proceed with equity-indexed annuities that come with different stock options.

● Lifetime Earnings: Some annuities, like the Lifetime Immediate option, will give you a regular income stream for the rest of your life.

● Passed To Beneficiaries: Just like standard life insurance covers, some of the lifetime annuities give you the option of directing guaranteed returns to your beneficiaries in case you pass away.

The Downsides of Annuities As a Retirement Investment Option

● Penalties for Early Withdrawal: Some of the annuities will charge you a penalty as high as 10% if you withdraw your cash prematurely. So, in short, annuities would not be ideal if you’re looking for Baby Boomer retirement investment options with sufficient liquidity.

● Taxes on Net Returns: Although annuities enjoy tax deferrals, your net returns during withdrawal will eventually be taxed, just like regular income.

● High Commissions and Fees: Compared to other Baby Boomer retirement investment options, annuities will cost you relatively high extra fees during purchase. Insurance companies and their accompanying sales agents can be quite pricey.

For additional information about annuities, feel free to check out our comprehensive guide on The

The Top Performing Annuities for 2020.

Bonds: Lending The Government High-Interest Loans

What Are Bonds?

Governments have always been one of the safest low-risk parties when it comes to retirement investments. And while there are many approaches you could use to generate income from the governing bodies, bonds are admittedly the easiest to venture into.
That said, bonds are technically fixed-interest loans you lend the government or perhaps an established corporation. Not directly though. But rather, you purchase an asset that guarantees regular payment of returns over a specified period of time.
There are three primary types of bonds, based on the party you end up transacting with:

● Treasury Securities: These are notes, bills, and bonds you purchase directly from the federal government, through the Bureau of Public Debt. The U.S. Department of Treasury offers them in different maturity dates, ranging from 30 days for short-term investments, to 30 years for long-term investments.

Hence, you can think of Treasury Securities as a means the government uses to borrow domestic loans. The resultant interest earnings are then spared from local and state taxes.

● Municipal Bonds: While Treasury Securities deal with the federal government, Municipal Bonds are offered by local and state governments. Such governing bodies will then leverage your retirement funds to implement public projects like road and school construction.

It’s worth noting, however, that Municipal Bonds carry more risk than Treasury Securities since local governments can go bankrupt. But then again, on a brighter note, at least you’ll be spared from federal income tax, as well as selected state and local taxes.

●  Corporate Bonds: Just like governments borrow domestic loans in the form of treasury securities, companies tend to capitalize on corporate bonds. That means corporations get to use your retirement savings to execute large projects, and then pay you the pre-specified returns on the maturity dates.
The only problem is, Corporate Bonds present the highest bond risks since their performance depends on the survival of the company.

But, considering the additional risk translates to substantially higher returns, these bond options might not be that bad after all.

And speaking of which, the corporate bonds with the highest possible yields are usually purchased from companies with low credit quality. They are officially known as “junk bonds”, and if you choose to proceed, you might want to invest only a small chunk of your retirement savings. 

How to Invest In Bonds

Bonds, unfortunately, are not available through stock exchange platforms. Instead, they are purchased directly over the counter.

So, you’ll have no choice but to rely on a broker, especially when it comes to buying Corporate Bonds and Municipal Bonds.

Well, you could invest with a full-service broker after running the bonds through sites such as the Financial Industry Regulatory Authority or the Securities Industry and Financial Markets Association.


However, for cheaper rates, you might want to use platforms like Vanguard, T.Rowe Price, or Fidelity. Their fees are much lower than what full-service brokers typically charge for bond trading.

But, on the flip side, full-service brokers offer better customer experience. They’ll even help you choose the bonds with the best possible yields.

Now, if Municipal bonds or Corporate bonds are not your thing, you could try out Treasury Securities. But, please note that this option follows a very different procedure.

A much simpler one though. Because, as it turns out, Treasury Bonds give you the privilege of trading directly with the Department of the Treasury through its online portal.

You just need to access the Treasury Direct website, set up an account, and then proceed to freely invest in Treasury Bills, Notes, and Bonds.

Treasury Direct

Average Performance of Bonds

There’s a wide array of Corporate Bonds, Municipal Bonds, plus Treasury Securities on the market today. And based on their performance levels over the past couple of decades, they are proving to be pretty fluid, with interest rates that vary quite extensively.

The good thing about this is that it gives you a range of options to choose from. But, all things considered, the bulk of Baby Boomers who put their retirement savings into bonds tend to go for Treasury Securities.

The reason being, federal government bonds are low-risk retirement investments that are easily accessible. Even novice investors can begin trading in no time.

So, what type of returns should you expect from such an investment venture?

Well, overall, the past few years have been rewarding for bond investors. 2019 was, in fact, the capping of it all, as the prices of Treasury Bonds, Municipal Bonds, and Corporate Bonds rose sharply.

Treasury Bonds with a maturity period of 10 years, for instance, managed to hit a return rate of 13%, while Long-term Treasuries that stretch beyond 20 years generated solid 20.2% year-to-date returns.

These, for your information, are rates we haven’t witnessed since 2009, when we had just started recovering from the recession. And according to Fidelitythe trend is expected to continue well into 2022, as fears of a possible recession continue easing.

The only challenge right now is possibly the CoronaVirus pandemic, which has been threatening the stability of the global economy since the beginning of the year. It has, so far, triggered a drop in the annual rates, but they are expected to pick up by mid-year.


Treasury Bond Rates. Source: Fred Economic Data

That notwithstanding, the leading Corporate Bonds are set to remain stable over the next couple of years. High-yield bonds rose quite dramatically in 2019, hitting returns of 14.4%, a new high since the energy sector problems we witnessed back in 2016.

The Benefits of Bonds As a Retirement Investment Option

● Known Return Rates: Bonds are not speculative retirement investment options. Rather, they are fixed assets that come with known return rates. So, you should be able to estimate your cumulative maturity earnings with certainty.

● Low-Risk Investment: While high-yield Corporate Bonds can be relatively risky, Municipal Bonds and Treasury Securities are considered low-risk retirement investment options. Federal and state governments are both permanent entities that will always meet their end of the bargain.

● Tax Exemption: Your interest earnings from Municipal Bonds and Treasury Securities will be exempted from federal tax, as well as selected state and local taxes.

● Liquidity: Although bonds have fixed rates, you’re allowed to liquidate them at any time by simply selling to other parties. You can even offset numerous bonds at once with marginal effects on the price.

● Flexibility: Bonds accommodate all types of investors. Baby Boomers can invest in either Treasury Notes, Treasury Bills, or Treasury Bonds straight from the department’s trading portal. You also have the option of proceeding with short term Treasury Bonds, or alternatively, hold on to long-term bonds until retirement. 

The Downsides of U.S. Bonds As a Retirement Investment Option

● Interest Rate Risk: The downside to fixed interest rates is, the value of your bonds could drop after the general market interest rates increase.

● Long-Term Maturity: Long-term Treasury Bonds can keep you waiting for as long as three decades.

● Restrictions and Penalties: If you try to cash in your bond investments before their stipulated maturity dates, you might have to incur heavy penalties in the form of percentage deductions.

● Buying Limits: Bonds don’t give you the freedom to invest endlessly. The most you can acquire from an auction, for instance, is 35% of the initial offering amount.

Real Estate Investment Trusts (REITs): Get Rich From Property Without Developing One

What Are Real Estate Investment Trusts?

Real estate is big and it’s known to be an incredibly rewarding investment. That’s undeniable. But so is the fact that real estate is often considered to be a venture reserved for the few with big bucks.

Well, that was the situation for many years. Until they finally introduced Real Estate Investment Trusts, which are popularly known as REITs.

Now, in essence, REITs will give you a shot at investing in real estate. That means you can participate in shaping this nation’s housing and urban infrastructure even after retirement.

Not directly though, as REITs are just shares offered and managed by real estate companies. They save you from the trouble of developing actual properties by simply generating dividend-based income, which comes from real estate projects ran by REIT providers.

So, in short, REITs allow you to acquire real estate assets in the form of a stock portfolio. You can freely trade, transfer, or liquidate them, just like regular company stocks.

Established real-estate companies, on the other hand, leverage REITs for additional capital. Then after setting up income-generating properties, they pay you back via periodic dividends. Hence, it’s a win-win for both parties.

And get this. This model is so popular in the US that, according to Nairet, more than 87 million Americans are proud owners of REIT stocks. Even Baby Boomer investors have not been left behind.

They don’t venture into similar stocks though, because it just so happens there are six different models of Real Estate Investment Trusts:

● Mortgage REITs: Mortgage REITs, which are otherwise known as mREITs, allow you to invest in real estate development directly via mortgages, or indirectly through Mortgage-Backed Securities.

● Equity REITs: These are the most popular types of REITs, as they give you the chance to earn income indirectly from a wide range of rental properties. The real estate companies involved manage a diverse portfolio of multiple properties, from which they collect returns and pay you via dividends.

● Hybrid REITs: Hybrid REITs are a blend of both Equity REITs and Mortgage REITs. The stocks come with a portfolio of both mortgage-backed holdings and rental properties.

● Publicly Traded REITs: This refers to all types of REIT stocks that are listed on securities exchange platforms. They are supervised by the U.S. Securities and Exchange Commission (SEC) as assets that can be publicly traded.

● Public Non-Traded REITs: These are the opposite of Publicly Traded REITs. Although they’re also supervised by the SEC, you can’t publicly trade them via national securities exchange platforms. So, of course, they may not be very liquid, but they manage to make up for that through stable trading. In other words, they are capable of resisting multiple market forces.

● Private REITs: Unlike Publicly Traded and Publicly Non-Traded REITs, private REITs are not available on any public platform. They are not even covered by the SEC. Rather, they are left to the discretion of selected private investors. 

How to Invest In Real Estate Investment Trusts

The Baby Boomers who invest in REITs tend to acquire them through the leading stock exchange platforms, just like regular public stock. Publicly Traded REITs are the most predominant type, and you can go ahead and trade them freely as debt securities, preferred stock, or common stock via platforms like NASDAQ or the New York Stock Exchange.

A word of caution though. Since there are numerous possible options, you might want to zero in on the select few that meet your retirement investment needs.

Your professional financial planner, investment advisor, or stockbroker could help you analyze everything accordingly, and possibly even recommend a couple of solid REIT options. 

Average Performance of Real Estate Investment Trusts

They say that you can never go wrong with real estate investments in a stable market. And true to that, Real Estate Investment Trusts have a history that places them squarely in the league of the highest-performing assets in the stock exchange.

Case in point- consider the FTSE NAREIT Equity REIT Index, which investors fundamentally rely on when they need to assess the overall performance of the American real estate market.

Now, if you review its figures between 1990 and 2010 for instance, you’ll notice it managed to post an impressive annual return rate of 9.9%.

And get this. The only benchmarking asset that was able to surpass that over the same period was mid-cap stocks, which took the pole position with an average annual rate of 10.38%. REITs then came second, leaving classes like fixed income assets far behind with 7%. 

Historical Performance Rates of Leading US Benchmarks. Source:

Come to think of it, however, you might have reservations about putting your money into real estate because of what happened in 2008. And as a matter of fact, quite a number of Baby Boomers dread a repeat of the Great Recession of 2008, which almost brought the real estate market to its knees.

That’s totally understandable, I must admit. But, here’s the thing. Compared to the rest of the stock indexes, the FTSE NAREIT Equity REIT Index has been enjoying a pretty remarkable run.

It only experienced two bad years between 1990 and 2010, both of which saw it finish as the worst performer among 8 major asset classes. Quite unfortunate, but not as tragic as fixed income, which came last 6 times over the same two-decade period.

If that doesn’t seem convincing enough, then consider this. It took REITs about three years to fully recover from the recession, after which they ultimately returned to their pre-recession rates. Consequently, from March 2013 to March 2016, the FTSE NAREIT Equity REIT Index registered an average annual return rate of 11.21%.

And it doesn’t stop there. When we switch over to its current performance, most notably from January 2015 to January 2020, the FTSE NAREIT Equity REIT Index posts an average yearly return rate of 8.4%. A fairly slight drop from its 3-year average of 10.4%, which was recorded between January 2015 and January 2018.

FTSE NAREIT Equity REIT Index 2015-2019. Source: FTSE Russell

So, even when REITs seem to be a considerably volatile retirement investment option, the truth of the matter is, they still manage to perform well. Much better than a host of other investment options.

The Benefits of Real Estate Investment Trusts As a Retirement Investment Option

● Investing In Real Estate: Although indirect, REITs give you the chance to invest in real estate and, subsequently, take advantage of its immense potential.

● Increased Investment Flexibility: REITs are flexible enough to allow you to buy properties and proceed to generate returns for a little as a few hundred or thousand dollars.

● Highly Liquid: REITs are highly liquid retirement investment assets that can be traded and exchanged freely, just like regular stocks.

● Regular Dividends: Apart from market price appreciation, you get to generate returns from REITs through regular dividend payments. Providers periodically distribute real estate profits among REIT shareholders.

● Diverse Property Portfolio: REITs give you the privilege of investing in a wide range of real estate properties at the same time. Such a diverse portfolio translates to much lower levels of retirement investment risk and volatility.

The Downsides of Real Estate Investment Trusts As a Retirement Investment Option

● Volatile Real Estate Market: The real estate market is pretty volatile because of the numerous economic, social, political, and environmental factors affecting it. A single event alone can potentially have a drastic impact on the performance of REITs.

● Unclear Stock Values: While Publicly Traded REITs always come with stock price indicators, Non-Traded stocks can give you a hard time before you establish their stock value. Turns out you’ll have to wait for at least 18 months after the close of their offering to get a rough price estimate.

● Tax Deductions: Returns earned from REIT dividends are usually taxed as regular income.

Individual Stocks: Own Several High-Net Companies At Once

What Are Individual Stocks?

Just as REITs give you a piece of the vast real estate market, individual stocks will earn you corporate ownership. In other words, you get the chance to join the ranks of company owners by simply purchasing individual corporate stocks.

And how does the whole thing work?

Well, it all begins when a company decides to go public. It converts from private ownership to public ownership by offering shares through the stock exchange. Then for a set price, you acquire a limited personal stake in the corporation by buying and owning a couple of its individual stocks.

The company, on the other hand, uses the chance to raise capital from the stock investments. Every single share translates to funds that could be used to expand its operations.

In the meantime, you’ll retain the right to transfer ownership to other parties by trading the stocks. You could also increase your ownership rights by purchasing additional stocks from other shareholders.

Such an investment typically generates returns from dividends, which are usually paid out to shareholders periodically. Alternatively, you could sell off the shares at a reasonable profit after their market value grows.

It’s worth noting, however, that all these privileges depend on the type of stock you’re dealing with. Common stocks are the standard type, and they’re known to give shareholders voting rights, as well as the benefit of earning income directly from the company’s profit.

But that’s not all. Common stocks will further allow you to earn dividends that are proportional to your investment amount.

Now, if you want special treatment, you might have to consider switching from common stock to preferred stock.

And when it comes to that, one of the principal things you’ll notice is that preferred stocks operate like bonds. Dividends are essentially paid in fixed amounts.

Not just randomly though. But rather, remittances are made to preferred stockholders before switching over to common stockholders.

This sequence is usually maintained in other company activities too, including voting, liquidation, bankruptcy filing, etc. Preferred stock owners are given preferential treatment and their interests are prioritized over the needs of common shareholders.

The best part, however, is this- the prices of preferred stocks are not as volatile as their common counterparts. They are considerably more stable and they tend to withstand negative market forces for a much longer period of time than common stocks.

But, unfortunately, it’s not all good news. While resisting value depreciation is a great thing altogether, preferred stocks don’t stop there. They also happen to resist value appreciation. Their prices typically take longer to gain value, as opposed to common stocks.

So, in essence, preferred individual stocks would be an ideal retirement investment option for Baby Boomers who prioritize stable income over long-term growth.

How to Invest In Individual Stocks

The process of buying individual stocks begins with firm selection. You’re required to choose a reliable and experienced brokerage firm that will facilitate your stock trading over the long haul.

Thankfully, the current breed of stock brokerage firms conducts most of its activities over the web. So, you should have an easy time working with them as you buy, exchange, and sell off your individual stocks.

Now, the trick to identifying the best possible investment partner is running your options through rating agencies like Moody’s, as well as Standard & Poor’s (S&P). Plus, you might want to do additional research to understand the scale of fees charged by various firms, and their corresponding service framework.

Once you’re done, the process of signing up with your selected stockbroker should be basic. Just fill in the details, set up your account, upload your stock trading funds, and voila. You can then proceed to trade individual stocks.

The stock trading dashboards on most brokerage firms offer self-directed trading by default. But, you could go ahead and seek additional assistance from the firm’s professionals. This may cost you extra bucks, but it’s definitely worthwhile if you’re a beginner.

‘In the end, you should be able to purchase individual stocks by typing in your order, and then specifying your investment budget, as well as the type of order you’d like to apply.

A market order at this level will process the trade immediately, while a limit order will hold off the transaction until the stock price hits your specified value.

Average Performance of Individual Stocks

Stocks are possibly the most diverse retirement investment option. There’s an unlimited number of stock combinations you could consider for your investment portfolio, and the subsequent selection process could be overwhelming as you start off.

Now, to make your work easier, I’d advise you to take advantage of the leading share indexes. The most accurate one, according to Warren Buffet and a host of many other industry experts, is the S&P 500 index.

But how good are its stock options?

Well, I don’t know about you, but I’d say an average annual return rate of about 10% since 1926 is pretty solid.

Yes, that’s right. The S&P 500 index has been around since 1926. And according to statistical analysis from MacroTrends, 10% has been the standard return rate between then and 2020.

S&P 500 Return Rates 1926-2020.

One thing you should note, however, is that the S&P 500 featured only 90 stock options when it was incepted. It was not until 1957 that additional shares were thrown in, consequently pushing the cumulative volume to 500 high-performing stocks.

Now, guess what?

Interestingly, when you zero in on the index’s overall performance from 1957, the average annual return rate drops to 7.96%, which is still a decent performance.
So, in essence, you can expect your Baby Boomer retirement investment to generate earnings of between 8% and 10%.

But, make no mistake, things could change very abruptly since the stock market is very volatile.

However, if you’re a calculative and strategic investor, you might be able to capitalize on various market conditions for increased stock returns. 

In fact, I bet you’ve heard about a couple of people who’ve turned their stock market investments into millions of dollars overnight. Do you have what it takes to join the bandwagon?

The Benefits of Individual Stocks As a Retirement Investment Option

● Strong Returns on Investment: For decades now, individual stocks have proven that they’re capable of generating and maintaining considerably good returns on investment. An annual rate of about 10% places stock trading ahead of numerous alternative investments.

● Ownership Stake: By purchasing individual stock, you automatically join a company’s ownership ranks as a minority owner. This gives you the power, however small, to influence the company’s decisions and operations. You could, for instance, vote in your preferred corporate leadership.

● Increased Liquidity: Stock trading is a continuous activity. And considering thousands of stocks change ownership by the minute in the US, you should have an easy time offsetting your portfolio if you need to recover your investment.

● Dividend Income: In addition to trading shares, the stock market allows you to generate supplementary earnings from dividend payouts.

● Infinite Earning Potential: As a strategic investor, the stock market offers limitless opportunities to grow your money immensely within a relatively short period. Stocks alone have created quite a number of overnight millionaires.

● Diversification: You have the freedom to invest in stocks across multiple industries, trade shares in different markets, transfer company ownership to multiple individuals at the same time, as well as venture into various types of stocks.

The Downsides of Individual Stocks As a Retirement Investment Option

● High Investment Risk: Although they can be very rewarding, individual stocks expose your investment funds to many risks. You could lose everything in just a matter of hours or days.

● Time-Consuming: Investing in stocks is like playing a never-ending game of chess. You need to persistently analyze your risk, research extensively on numerous market factors, pay attention to a wide range of trading variables, and keep changing your approach strategy. All this takes a lot of time and you might find yourself overly-consumed by stock trading.

● Emotional Roller Coaster: Stock prices keep falling by the second while others shoot up astronomically, public companies are always making decisions that could affect their stock prices, and market variables are constantly changing. Such uncertainties turn stock trading into a game of chances that could keep you in an emotional roller coaster.

Proceed to our
Top Dividend Stocks for 2020 guide to discover where the money currently lies in the stock market.

Mutual Funds: Take Advantage of Experienced Professionals In Managing Your Investment Portfolio

What Are Mutual Funds?

Mutual funds are basically a combination of all the retirement investment options we’ve discussed so far. Money is pooled from various investors and collectively invested in a range of assets such as bonds, stocks, trusts, etc. Hence, mutual funds portfolios allow you to venture into multiple types of investments at the same time. 

And you know what? You won’t be the one managing them. But rather, mutual funds are run by professional money managers, who calculatingly distribute the money among different assets. Then in the end, they are expected to pay investors from the resulting capital gains.

That said, there are four types of mutual fund portfolios based on the investments they venture into.

● Equity Funds: These are mutual funds that focus on company stocks, which makes them particularly high-risk. But then again, there’s a lot of money you could potentially make here if your mutual fund managers are great at stock trading.

● Fixed Income Funds: While equity funds go into stocks, fixed income funds are all about corporate and government bonds. This provides a steady retirement income through regular dividend payments.

● Money Market Funds: Money market funds are exceptionally low-risk since they put money into selected guaranteed short-term assets issued by corporations, plus local, state, and federal governments.  

● Hybrid Funds: Hybrid funds, in short, leverage both equity funds and fixed income funds. This approach decreases the overall risk through extensive investment portfolio diversification.

How to Invest In Mutual Funds

If you have a 401k retirement account, then chances are, your money is already generating income from mutual funds. But, that notwithstanding, it would still be a good idea to directly put your retirement savings into mutual funds.

And to do that, the first thing you’ll need is a brokerage account. There are many online brokerage firms you could approach to set up one, and most of them come with their own mutual fund options.

Well, you could proceed with your brokerage firm’s mutual funds if they have great income odds. The process is as simple as connecting your bank account to your online brokerage account, transferring the necessary funds, and then buying the mutual funds that interest you.

But, don’t feel restricted. You can still purchase mutual funds from other providers. Plus, it’s possible to buy and sell mutual funds from various brokerages at the same time.

A word of advice though. You might want to open your investment account with the firm that operates the specific mutual funds you’re targeting. This will save you money, as most brokerage firms in the US allow their account holders to buy and sell in-house mutual funds for free.

Average Performance of Mutual Funds

To get a good sense of the type of returns you can expect if you choose mutual funds as one of your Baby Boomer retirement investment options, let’s look at the performance across seven broad categories.

According to figures published by Morningstar Inca globally renowned financial rating firm, the broad categories had a combined average annual return rate of about 5.7% in 2021. 

The U.S. Large-Cap Stock funds have been particularly outstanding, since they averaged 26.07% in 2021, and 23.83% over the last 3 years. The average annual rate then drops to 16.57% when you consider their 5-year performance, but recovers to 11.47% at the 10-year mark.

Average Performance of Mutual Funds. Source: Morningstar Inc

All in all, the seven categories have recorded an average annual return rate of about 6% over the past 15 years. That’s a pretty decent performance, especially when you take into account the devastating effect the 2008 recession had on mutual funds.

The Benefits of Mutual Funds As a Retirement Investment Option

● Extensive Diversification: Mutual funds are, admittedly, low-risk investments for Baby Boomers who are retiring since they go into numerous ventures at once. A single mutual fund can possibly feature thousands of stocks and bonds from a vast array of providers.

● Affordability: By pooling money from different investors, mutual funds get to accommodate both heavy and light buyers. Hence, you can invest as little as a few dollars.

● Professional Management: You won’t be the one calculating the risk of various security options, or buying and selling company stocks in the financial markets. All that is handled by skilled professionals who manage your mutual funds. So, in essence, you get to enjoy your retirement income while mutual fund managers do the heavy lifting.

● Flexibility: Most of the mutual fund providers offer multiple switchable fund options, all of which come with their own unique set of ventures. You can buy several at the same time, as well as freely interchange them based on your Baby Boomer retirement investment goals.

● Liquidity: A typical mutual fund investment won’t tie you down. You can easily liquidate it into cash by selling.

The Downsides of Mutual Funds As a Retirement Investment Option

● Management Fees: The benefit of professional management comes at a price. Mutual fund providers usually charge fees to manage your investment, even when it performs poorly. In fact, and rather ironically, a number of studies have established poor performing mutual funds charge relatively high management fees.

● Penalties: Some of the mutual funds will tie you down for years and charge hefty penalties if you choose to withdraw money before the maturity date.

Chapter 5: Common But Costly Retirement Investment Mistakes To Avoid

In all honesty, investments could go both ways. They can perform well and subsequently generate a decent income. Or, on the other hand, they might end up eating into your retirement savings.

Recent data from the Federal Reserve paints a grim picture of how fast the odds could drastically change. It turns out that although 2018 was a seemingly calm year, Americans lost $4 trillion in just 3 months.

And yes, you can bet this affected even Baby Boomers who had put their money into various retirement investments.

But what was the reason behind the losses?

Well, the Federal Reserve and most people blame it all on the slight stock market drop of 2018, which for your information, proved to be the worst since the Great Recession in 2008.

Ok, fair enough. But then again, there’s still a good number of people who made money from stocks in 2018.

Take, for instance, Baby Boomers who invested in Amazon stocks.

A single share at the beginning of the year was priced at $1,172. This might not have seemed like a good bargain, but here’s the thing. The few that did their research about the company and went ahead to invest in its stocks, eventually sold them for about $1,754 towards the end of the year. That translates to a profit of almost 50%.

What does this mean?

Well, like it or not, there will always be winners and losers when it comes to investments. Even when the market seems to be down for everyone, there will always be an exceptional group of investors who defy the odds.

The likes of Warren Buffet and John Paulson, for example, made billions after capitalizing on the opportunities that came with the recession.

Now, ever wondered what exactly makes these types of investors special?

What’s the difference between them and other investors?

I know what you might be thinking. And no, it’s not luck. But rather, they largely rely on their personal investment choices.

It doesn’t take a genius to turn retirement investments into good returns. You just need to know how to invest, when to invest, where to invest, and most importantly, how not to invest.

Now that we’ve explored the first three aspects, let’s look into the last one. How should you not invest?

To answer that, here are 7 of the most common but costly retirement investment mistakes Baby Boomers should avoid:

1. Failing To Rely On A Solid Written Strategy

If you’re planning to venture into Baby Boomer retirement investing without a well-structured strategy, you’ll be setting yourself up for disappointment. The most successful investors begin by drafting a comprehensive plan that details not only their objectives, but also a step-by-step procedure of how they intend to achieve them.

Fortune Magazine demonstrated the difference this approach makes, after comparing investors who rely on a written plan with their counterparts who prefer to proceed without one. The study ultimately discovered that the former group retires with about five times more money than the latter.

Harvard Business School also reportedly did its extensive research on the matter, in which 83% of the surveyed individuals were found not to have well-defined goals, while 14% had them but were not written down. The group that had taken the time to set goals in writing only added up to 3%.

But, it paid off. After monitoring each group’s progress for 30 years, the study ultimately concluded that the 3% group, on average, made 10 times more money than their 83% counterparts.

Interestingly, these findings continue to attract debate, with some even dismissing the study as a myth. However, myth or not, other verifiable studies on the matter have recorded similar patterns. That people with a well-thought-out written plan will always outperform the rest when it comes to finance and investing.

2. Underestimating The Cost And Length Of Retirement

Going by the average life expectancies we’ve discussed, a Baby Boomer who retires at the age of 65 could spend nearly a quarter-century in retirement.

Now, let’s put that into perspective. Chances are, a baby born on your retirement day will grow to become an adult while you’re still in retirement.

But, that’s not the way most people see it. Rather, they tend to think of retirement as a short low-expense life period, which can’t be farther from the truth.

Retirement health care alone, for instance, will cost a 65-year-old couple about $285,000. That’s according to estimates prepared by Fidelity, which take into account the current health care costs in the US.

Now, combine that with other household bills you expect to incur in two decades. Does retirement still seem cheap?

The best way to protect yourself from all these costs is by taking up Baby Boomer retirement investment options that provide steady long-term income. I’m talking about ventures that will consistently generate at least 80% of your annual pre-retirement salary.

3. Failing to Account for Inflation

A dollar today will be worth 2% less next year. That’s basically how inflation works.

However, and rather unfortunately, pension schemes don’t take this into account. What you save is what you eventually get throughout retirement. So, imagine the cumulative loss in value if 2% is compounded every single year for two decades or so.

And that’s not all. You stand to lose so much more as the cost of living keeps rising every year. Pension retirement income for most Baby Boomers is fixed, yet the costs of healthcare, food, housing, and other essentials are always adjusted for inflation. 

Then to make matters worse, the inflation rate is not constant. While the annual inflation rate in 2021 was 2.26%, it’s projected to rise to 2.4% by the end of 2022, and hit 2.3% in 2023. So, in short, expect your retirement costs to increase at a higher rate in the near future.

Projected Annual Inflation Rate. Source: Statista

Now, since you can’t control inflation, the only option here is staying ahead of it. Keep your retirement savings invested in assets that continue to appreciate at a much higher rate than inflation.

4. Failing To Capitalize on Tax Deferrals

Uncle Sam has been kind enough to ease the burden of retirement through various tax incentives. And most notably, he applies tax deferrals on retirement savings to encourage Baby Boomers to put aside money for retirement.

401(k) and 403(b) plans, for example, benefit from income tax-deferrals. So, they should come in handy when you need to reduce your income tax.

And that's not all. There are many additional tax incentives for different long-term investment options at the federal, state, and local levels.

So, all things considered, minimizing income tax while expanding your retirement investment portfolio is a no-brainer. All Baby Boomers should have joined the party already.

But, surprisingly, it turns out a huge chunk of them are seemingly missing out on tax incentives. The GOBankingRates study we’ve just reviewed concluded 42% of Baby Boomers are not concerned about their retirement savings, while only 13% are seeking to grow their savings - possibly through retirement investments.

In a nutshell, therefore, most Baby Boomers today are paying taxes they can possibly avoid. It's only a matter of directing a part of their income into retirement savings and investments.

5. Spending Too Much

According to a report published by J.P Morgan Asset Management, retirement savings and investment accounts are increasingly being compromised by uncontrolled spending. It just so happens that, on average, retirees are withdrawing more than 20% from their retirement plans every year.

And now that the rate is highest among new retirees, its obvious Baby Boomers are the hardest hit, and they risk depleting their resources before they even hit 80.

Well, 80 years might sound like a ripe old age since it falls within the life expectancy range. But, the reality is, there’s a 50/50 chance that either you or your spouse will live beyond the age of 90. So, you might want to tame your spending habits and plan wisely for at least three decades of retirement.

You could, for instance, consider applying the 4% rule on your retirement investments. That means withdrawing no more than 4% every year, or possibly 6% if you need to adjust for inflation.

At such a rate, you can bet you’ll always have enough reserve funds for investing in various ventures, without interfering with your regular income stream.

6. Investing Too Aggressively – Or Not Aggressively Enough

The one thing that can potentially pull you down from a high net worth to zero in just a matter of days is a poor investment decision.

You might, for example, consider pooling your resources and investing the bulk of it in stocks. The stock market presents countless company shares enjoying seemingly promising runs, which look like they could possibly make you a quick fortune.

Quite tempting right? Many investors have done it before, and financial experts predict that we’ll see many more success stories in the future. Hence, the stock market would understandably appear to be a great retirement option for aggressive investors, especially Baby Boomers who might be trying to make up for their little retirement savings.

But, here’s the rub. Although we’ve praised it for its potentially rewarding returns, the stock market is still a high-risk venture. It’s certainly not the type of investment you’d want a substantial chunk of your retirement savings tied up in.

That, however, is not to say you should avoid it completely. While investing too aggressively could be detrimental, the opposite is also true.

Staying away from all types of risks by focusing entirely on guaranteed investments such as annuities, Certificates of deposit, and money market funds is the surest way to stagnating. Your growth, if any, will be very slow and inconsequential.

In fact, you could even end up making negative returns, as you’ll be required to pay taxes and possibly brokerage fees.

That said, retirees are encouraged to set up diverse portfolios that feature both types of investments. High-risk options are meant to generate great returns, while low-risk investments will protect your retirement savings.

7. Ignoring Investment Expenses

The cost of investing is higher than you probably assume. Retirement investing is not free and most people make the mistake of ignoring the facilitation fees.

Take equity mutual funds for example. Baby Boomers typically factor in only the management cost, which should be about 1.5% give or take.

But, as it turns out, that’s just one of the several types of fees you stand to incur over the long haul. Your mutual fund investment could further attract hidden charges such as 12b-1 fees, portfolio turnover costs, and other possible extras. Consequently, the total overhead expenses would climb to 3% or so.

Now, if you think the extra 1.5% is negligible, I’d advise you to calculate the funds you stand to lose if 1.5% was compounded over a period of about 30 years or more. You’ll notice that, get this, the 1.5% difference translates to losses exceeding the principal amount.

So, all in all, you cannot afford to turn a blind eye to your retirement investment charges. Factor in all the extra fees, including hidden charges, before proceeding to invest in anything.

Chapter 6: 9 Fast-Track Tricks Baby Boomers Have Used To Turn Their Investments Into Retirement Success

1. Getting Rid Of Debt

Successful investors know that debt is detrimental to their income. It gradually eats into the cash flow. And this, of course, translates to reduced retirement investment capital.

Now, although you might be expecting some returns from your investments during retirement, the best time to pay off your debts is way before retiring. In fact, the earlier you get out of debt, the lower the corresponding interest amount.

The trick here is, begin with a comprehensive list of all your unpaid debts. You should then sort them based on their respective interest rates, starting from the highest to the lowest.

That’s essentially the order of payment that successful Baby Boomers follow. More specifically, they start with the debts owed to high-interest credit cards, before proceeding to the rest. And in the end, they go into retirement completely clean, free of debts.

2. Consolidating Investment Funds

Now that you’ve been working for decades, you probably have several retirement investment accounts with various banks and firms. That’s totally understandable, especially if you want to diversify your investments.

However, and rather ironically, it has been proven over and over again that such a complicated approach could have the opposite effect. Instead of diversifying, the investment holdings might end up overlapping each other.

Now, to avoid all that, the most successful Baby Boomers tend to apply a much simpler strategy. They consolidate their investment funds into a few accounts, from which they streamline everything while minimizing their overall account fees.

3. Minimizing Household Expenses

Although you’ll be spending most of your retirement time at home, you should consider dropping some luxuries. The reality is, you probably won’t be getting as much income as you previously did.

So, to make the most out of the situation, the best investors choose to cut their household expenses. They make both short-term and long-term sacrifices for the sake of their retirement savings and investments. 

4. Limiting Taxes

Reviewing the terms of various investment accounts sounds pretty hectic, but you don’t have much of a choice. Good investors take the time to learn the ins and outs of different retirement investment options, then subsequently use the knowledge to minimize their taxes.

They typically put their money into ventures and accounts with the most favorable tax incentives. This limits the amount of income taken by Uncle Sam before and during retirement.

5. Signing Up For Medicare

Considering healthcare is one of the biggest retirement expenses for Baby Boomers, it’s always a good idea to sign up for Medicare. It comes with various reasonably-priced insurance coverages for nursing care, preventive services, follow-up care, etc.

That said, the Medicare open enrollment period kicks off 3 months before your 65th birthday, and then it lasts for about 7 months.

6. Moving Abroad

Some of the Baby Boomer retirees became successful after taking the bold step of moving abroad. This alone allowed them to save quite a lot of money, which would otherwise have been consumed by the high American taxes and living expenses.

Some of the most notable retirement havens to consider include Spain, Thailand, Peru, Portugal, Malaysia, and Panama.

7. Creating a Retirement Budget

For most people, retirement is the period of enjoying the fruits of their hard labor. Hence, they usually start off with a bang, which eventually turns into despair when they deplete their retirement savings.

Now, to avoid such temptations, good retirement investors are known to take a strategic approach. They begin by preparing retirement budgets based on realistic expectations.

But, don’t get me wrong. Creating a budget doesn’t necessarily mean cutting down on all the benefits that come with retirement. But rather, it’s all about planning a lifestyle that maintains a perfect balance between your retirement income, investments, and expenses. 

8. Leveraging Guaranteed Income

Previously, retirees could live comfortably on Social Security benefits and pension schemes. They both provided decent retirement earnings for the bulk of the beneficiaries.

Sadly, things are not that rosy for Baby Boomers. The current generation of retirees can only live comfortably after supplementing their pension payouts with other income streams.

Hence, it’d be wise to invest in guaranteed income assets ahead of your retirement. Options like fixed annuities can provide the much-needed funds to cover some of the basic bills for the rest of your life. 

9. Consulting Financial Professionals

Managing Finances and investments might seem like a simple undertaking. After all, what’s so difficult about adding and subtracting figures?

Well, everything actually. Financial management is a field reserved for a select few. Only experts in the matter can figure out all the intricacies surrounding your money.

That’s why the best performing retirement investors are always working very closely with financial planners and advisors. They pay them to review their retirement investment portfolios, and advise on the most feasible risks for Baby Boomers.

Other than that, you could also hire financial planners to manage your retirement investments. This will cost you about 1% of your combined assets. 


And there you have ladies and gentlemen. All the essential retirement investment parameters that Baby Boomers need to know, as they try to secure a comfortable and financially-sound retirement.

That said, we wish you all the best going forward. But, before you leave, please share your thoughts in the comment section. Plus, of course, let us know- which of these Baby Boomer retirement investment options would you say is the best overall?

It walks you through the weaknesses and strengths of the 5 top retirement investing opportunities, 9 fast-track tricks that selected Baby Boomers have used to turn their investments into retirement success stories, plus 7 of the costliest mistakes that could possibly derail you along the way.