When it comes to personal finance, timing is everything. Time gives you compounding interest. Knowing when to retire or start drawing Social Security has an enormous impact on achieving your financial goals.

Failing to understand where you are in your path to retirement causes you to make mistakes. Baby Boomers, Gen Xers and Millennials need to be conscious of these common pitfalls.

Baby Boomers

Many of the mistakes Boomers make center around Social Security and healthcare. The two are really intertwined.

Understanding your health situation is vital in determining when you should start drawing Social Security. Start drawing too early, and you might not have the steady income you need throughout retirement. Start drawing too late, and you could be leaving money on the table.

You don’t have to guess. There are various resources and actuarial timetables available. Work with your advisor to come up with a concrete plan for your Social Security benefits.

Of course, you want to live as long and as healthily as possible. Having a long-term care plan will make that a reality and reduce the burden on your family when your health fails. If you are in your 50s or early 60s, consider long-term care insurance, and make sure you are budgeting for expanded healthcare expenses in retirement.

Generation X

The biggest problem we see with Gen X is that they aren’t scaling their retirement savings to their earnings. If you are between 40-55, these are generally the primary earning years of your life.

And yet, recent research shows fewer than 10% have enough saved for retirement. While it might seem like there is plenty of time to catch up, consider that older Gen-xers (50+) are eligible for catchup provisions to their 401k. The message from the government is clear. Now is the time to catch up!

Worse, many in this generation are dipping into their retirement accounts early, often incurring penalties or paying taxes in the process. If you are in this situation, work with your advisor to immediately get back on track.


It’s no mystery what is holding back Millennials from getting on track. College debt, credit card debt, mortgage debt... It’s hard enough to stay on top of your bills, much less focus on retirement.

This is a bigger mistake than you think. As we said, investments love time. The money you invest now will likely see much more compounded interest than it will 20 years from now.

Those who do invest are often too conservative, fearful of market declines. That fear is understandable, especially after the volatility of 2020, but younger investors have plenty of time to weather the financial storms, and should take a growth-minded approach to their investing.

In the end, knowledge is power. Know where you are, know where you want to be, and know how long you will need to get there. Avoid generational mistakes and make time work for you.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This article was originally published in the Pioneer Press. You may view the article here.