‘Peak 65’ boomers can’t tell if they’re ready to retire, and this ‘confidence paradox’ could cost them big in retirement

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It comes as no surprise that Americans are paying more for necessities than they did last year, and in response, they’re tightening their belts thanks to inflation.

So much so that a Lightspeed survey found that one in four consumers will shop on Black Friday only for everyday essentials, such as groceries, toiletries and household basics (1).

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Many working Americans aren’t stretching their dollars further in retirement either. About 55% of adults surveyed by Prudential this past summer said they’ve factored inflation into their retirement planning (2).

Despite this lack of planning, 89% of those surveyed have “high confidence” in covering essential retirement expenses (3). Prudential referred to this as a “confidence paradox,” where consumers have confidence despite lacking proper planning (4).

“Feeling ready is very different than actually being ready,” Caroline Feeney, global head of retirement and insurance for Prudential, told CNBC.

“People feel ready, so they’re not taking the necessary action and plans now to start saving and leaning into closing what may be a real retirement gap for their futures that they’re not aware of.”

Regardless, boomers should consider inflation when planning for their retirement.

What’s at stake?

A lack of planning could become even more challenging. Baby boomers are in the midst of “peak 65,” with more than 11,200 Americans turning 65 every day through 2027 (5).

This is a time when year-over-year inflation sat at 3% in September (6), already outpacing the announced 2026 Cost-of-Living Adjustment (COLA) for Social Security benefits of 2.8% (7).

Some older Americans have already expressed that the COLA isn’t enough to cover the rising costs of health care, housing and food. Their concerns are supported by Goldman Sachs Asset Management research, which shows retirees’ spending increased 3.6% annually from 2000 to 2023, while the consumer price index rose 2.6% over the same period (8).

Many adults plan for retirement, thinking that they can cut down expenses when they retire.

“When in reality, they usually spend more because they have more time to do a lot of the things that they enjoy doing,” certified financial planner Uziel Gomez, founder of Primeros Financial in Los Angeles, told CNBC.

Here are a few ways to prepare, regardless of whether you’re retiring now or in 20 years.

Read more: Warren Buffett used 8 solid, repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)

Build a better budget

Your golden years are meant for enjoying life, not stressing over every dollar. With a little planning and a realistic budget, you can make your savings work harder for you once the steady paychecks stop.

For some retirees, that might mean cutting housing costs by downsizing and redirecting those savings toward travel or hobbies.

Because there’s no one-size-fits-all strategy, budgeting apps like Rocket Money can be an excellent tool for tracking your spending and meeting your financial goals.

You can track and categorize your monthly expenses with Rocket Money — helping you stay on track of your finances. Rocket Money’s Financial Goals feature allows you to automate your savings, helping you build your nest egg in the background without any extra effort. They also offer a bulk subscription cancellation service, which could be a boon when you’re trimming expenses in the lead up to retirement.

The benefits don’t end here. With Rocket Money’s premium subscription, you can access your complete credit report and history, as well as get notified of any significant changes that impact your score.

For a small fee, their concierge service will negotiate a lower rate on monthly bills like cell phones and cable bills, as well as help you find better rates on auto insurance.

Plan with a professional

And if you want a bit more guidance, a financial planner can help tie everything together. They’ll look at your full financial picture — savings, spending, goals — and map out a plan that makes your retirement dollars work smarter.

Finding a vetted financial advisor is now easier than ever, thanks to platforms like Advisor.com.

All you have to do to get started is answer a few basic questions about your current financial situation and future goals. Then, Advisor.com’s AI-powered matching tool will comb through its network of fiduciaries to find the best match for you — all for free.

From there, you can set up a free, no-obligation consultation to see whether they’re the right fit for you.

Secure yourself from market shocks

Another factor to consider is your portfolio’s resiliency to market shifts and instability. A well-diversified portfolio typically includes a mix of stocks and bonds, but alternative assets — like real estate — are becoming progressively more accessible to average Americans.

Another alternative asset, and one that’s had a breakout year, is gold, a tried-and-true hedge against inflation.

A gold IRA is one option for building up your retirement fund with an inflation-hedging asset.

Opening a gold IRA with Goldco could be one option — as it can help you invest in gold and other precious metals in physical forms while also providing the significant tax advantages of an IRA.

With a minimum purchase of $10,000, Goldco offers free shipping and access to a library of retirement resources. Plus, the company will match up to 10% of qualified purchases in free silver.

If you’re curious whether this is the right investment to diversify your portfolio, you can download your free gold and silver information guide today.

Just keep in mind that gold is often best used as one part of an otherwise well-diversified portfolio.

Are you caught in a ‘confidence paradox’?

While the COLA does help retirees tackle inflation better than most financial products, older Americans are still struggling.

“A 20% lift over four years is life changing, even though it might not match the economy itself,” David Freitag, a financial planning consultant and Social Security expert at MassMutual, said of the recent cost-of-living adjustments, adding, “These are significant increases that make a difference in people’s lives.”

According to a September report from AARP, only 22% of people 50-plus feel the COLA adjustments are enough to keep up with inflation, with almost three-quarters (72%) saying it should be 5% or higher (9).

As you get closer to retirement, every dollar starts to matter more. Although budgeting and planning ahead help, you could also tap into deals and discounts tailored to older Americans.

For example, senior-focused organizations like AARP offer discounts on almost everything — from prescriptions and dental plans to travel, entertainment and insurance.

AARP can also help you make informed financial and health decisions.

AARP members get access to guides that can help you make the most of Social Security, choose the right Medicare plan, and uncover other government benefits — potentially saving you thousands.

Sign up with AARP today and get 25% off your first year.

Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Lightspeed HQ (1); Prudential (2), (3), (4); Protected Income (5), (6); Social Security (7); Goldman Sachs Asset Management (8); AARP (9)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.