With record numbers of baby boomers retiring every year, there is a lot of angst over how people are doing it, whether they’ve saved enough, or if they are picking the wrong time to retire. According to a 2019 survey, more than half of respondents cited a fear of outliving their savings in retirement, and over a third worried that they wouldn’t have enough to live comfortably.

For California residents, even the best-laid plans can run amok without clear goals and a periodic estate-planning review. From understanding how IRAs work and where to get creditor protection, to maximizing investment and minimizing tax burdens, it is important to find out more about how to protect your retirement plan so you can enjoy your golden years.

What are the biggest mistakes some people make?

Estate planning is a complex web of concerns that vary depending on the individual’s health, income sources, investment choices and life decisions. It isn’t simply a target number, as there are variables that negatively impact the future, such as sudden illness, investment losses, or unexpected financial troubles.

Some of the most consequential mistakes that you can make include:

• Going bankrupt: those retirees who did not reduce or eliminate debt such as a mortgage, credit card or medical debt before retirement are now on a fixed income, so an illness or medical expenses could send them over a cliff.
• No emergency savings: no matter how well you protect that nest egg, a medical or other life emergency could significantly deplete savings when you already have limited income sources.
• Borrowing from a 401(k): once a person stops making contributions, their employer will no longer make matching contributions, so there is less money for the future. In addition, the borrowed money is not earning interest, either. Other mistakes involve drawing too soon from an IRA or forgetting to meet required minimum distribution (RMDs), both of which can result in stiff penalties.
• Not having enough income: relying on one source of income such as Social Security will not be enough for most people. Therefore, a comprehensive estate plan will create multiple streams from pensions, annuities, and employer-sponsored accounts that also take into account long-term care options.

How should I plan for the future?

Understanding what lies ahead can help individuals plan for their retirement, both with an across-the-board estate plan as well as clear financial goals. When considering the costs, you should plan for a 30-year retirement, which may mean saving eight times your final salary. Reducing annual spending can help with any gap between fixed income sources and savings. Finally, remember to account for inflation and increasing health-care costs when planning.