Peak-65 Boomers Face a Retirement Confidence Paradox That Could Cost Them

Many baby boomers hitting the so-called "Peak 65" milestone are unsure whether they can truly retire — and that uncertainty masks a costly confidence paradox. Some retirees feel ready based on savings balances or home equity, yet underestimate future costs like long-term care, health premiums, inflation and market volatility. Others doubt their preparedness despite having relatively strong income sources such as pensions or sizeable 401(k) balances.

Financial planners warn this mismatch between perception and reality can produce expensive mistakes. Overconfident retirees may withdraw too much early in retirement, underestimate longevity risk, or delay seeking professional advice. Underconfident individuals may postpone retirement unnecessarily, foregoing flexible lifestyle choices and the nonfinancial benefits of stopping work.

Key drivers of the paradox include unclear spending plans, reliance on uncertain income streams (for example, variable investment returns and delayed Social Security decisions), and uneven financial literacy. Health costs remain a top unknown: Medicare does not cover all long-term care, and out-of-pocket expenses can rapidly erode nest eggs. Additionally, sequence-of-returns risk — suffering poor market returns early in retirement — can permanently reduce sustainable withdrawal rates.

Practical steps can reduce the risk. Experts urge a thorough retirement cash-flow plan that models expenses, different market scenarios and longevity assumptions. Stress-testing portfolios, considering partial annuitization for guaranteed income, and optimizing Social Security claiming strategies are common tactics. Boomers should also inventory guaranteed income sources, estimate realistic health and housing costs, and factor in taxes and required minimum distributions.

Accessing a trusted, fiduciary financial advisor or using robust planning tools helps translate confidence into a fact-based plan. For many, small adjustments — shifting allocation to reduce sequence risk, delaying Social Security for higher benefits, or securing supplemental coverage for health and long-term care — can materially improve retirement resilience.

The confidence paradox is not a simple optimism problem; it’s a planning gap. Recognizing the difference between feeling prepared and being financially prepared is the first step. A proactive retirement checkup can reveal hidden vulnerabilities and help boomers make informed decisions that protect income and preserve quality of life in retirement.