Retirement Ready: The 5 Financial Moves Baby Boomers Should Have Made By Now

As millions of Americans enter their retirement years in 2025, a critical question looms: are they truly prepared? According to recent research from the Alliance for Lifetime Income, the picture is concerning. The US is experiencing what experts call the “Peak 65 Zone”—a historic milestone where over 4.1 million Americans will turn 65 annually through 2027, translating to more than 11,200 people each day. Yet despite this wave of retirements, only a fraction of baby boomers (those now aged 61-79) have adequately prepared financially.

The statistics paint a sobering reality: 52.5% of baby boomers approaching retirement hold assets of $250,000 or less and will depend heavily on Social Security income. Another 14.6% possess between $250,000 and $500,000 in savings. This means roughly two-thirds of the boomer generation faces significant financial strain in their later years. However, a smaller but notable segment has made strategic moves to ensure retirement security.

Building Long-Term Wealth Through Tax-Advantaged Accounts

One hallmark of financially successful baby boomers is their consistent maximization of retirement savings vehicles. Contributing the IRS-allowed limits to employer-sponsored 401(k) plans and Roth IRAs from early career stages compounds wealth dramatically over decades. For 2025, the 401(k) ceiling stands at $23,500 annually, while Roth IRA limits cap at $7,000—both increased from 2024 figures.

Those aged 50 and above have access to additional “catch-up” contributions designed to accelerate savings during peak earning years. The 2025 catch-up limit for 401(k)s remains $7,500 for those 50-59 and 64+, while Roth IRA catch-ups add $1,000 more.

A major 2025 development: Individuals between ages 60-63 can now utilize an enhanced catch-up provision allowing $11,250 additional contributions (up from the standard $7,500), pushing their total 2025 401(k) contribution capacity to $34,750. This represents a significant acceleration opportunity for late-stage retirement savers.

Leveraging Health Savings Accounts for Triple Tax Advantages

Baby boomers positioned for comfortable retirement often overlooked one underutilized wealth-building tool: Health Savings Accounts (HSAs). When paired with high-deductible health insurance, HSAs offer tax-deferred growth, tax-free withdrawals for qualified medical expenses, and Medicare premium payments. For 2025, contribution limits reach $4,300 for individual coverage or $8,550 for family plans, with an additional $1,000 catch-up available for those 55+.

Diversifying Beyond Retirement Accounts

Savvy boomers recognize that retirement accounts alone may not suffice. Brokerage accounts holding stocks, ETFs, and mutual funds provide unlimited contribution flexibility and tax-efficient wealth accumulation. Starting investment accounts early—even modest contributions—allows compound returns decades of opportunity to flourish. This approach fills the gap when 401(k) and IRA limits are exhausted.

Securing Guaranteed Retirement Income

Among the most significant yet underutilized strategies is purchasing annuities. These hybrid instruments combine fixed-income and equity components while offering tax-deferred growth. During retirement, annuity holders can withdraw funds flexibly or annuitize balances to receive pension-like guaranteed income streams, with principal returns taxed favorably (taxation applies only to earned growth, not principal).

The Bottom Line for Boomer Retirement Security

Baby boomers entering retirement in 2025 face unprecedented opportunities and challenges. Those who systematically maximized 401(k) contributions, leveraged catch-up provisions (particularly the new 60-63 enhanced option), utilized HSAs strategically, diversified through brokerage investments, and secured annuity income have constructed multi-layered financial protection. For the millions of Americans transitioning into retirement, these five financial pillars represent the difference between anxiety-ridden years and a genuinely restful retirement phase.