Post written by
David Haass
Baby boomers are entering retirement with the confidence that the best years are still to come. Rightfully so, considering boomers are the first generation to grow up expecting life to continue improving.
In 2011, baby boomers started turning 65, and from now until 2030, that number will swell by 10,000 each day. That’s 70,000 per week and over 280,000 per month.
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Baby boomers are living well.
With nearly two decades of births and 75 million people, it’s not surprising this is the generation that’s redefining retirement and changing how the world perceives aging.
Baby boomers are one of the largest living adult generations, second to millennials. Iconic cohorts changed the world into adulthood and planned revolutionize retirement. After all, this demographic made demands for the promises of liberties within the constitution.
If you look around your city, you’ll see communities for empty nesters. There are retirement communities that offer everything you need, from shopping, doctors, hobby workshops and opportunities to meet new friends.
Baby boomers have the utopia they were dreaming of when celebrating the counterculture of the 1960s and ’70s.
Many baby boomers don’t have enough saved for retirement.
Consider for a moment being a decade away from retirement and having absolutely no savings accumulated. If you’re part of this generation, then recognize that concept is a reality for 45% of your peers.
In March of 2019, Andrew Biggs’s article in Forbes outlined that 77% of older Americans have a retirement plan; I believe, however, this is only if we factor in both retirement accounts and traditional pensions. Advisors suggest a robust portfolio when possible: stocks, bonds, IRAs, traditional pensions and retirement accounts.
But the reality is that for some people, that ship is gone. It’s too late to start saving for retirement when you’re already receiving SSI benefits.
Experts advise that you should calculate enough savings for a 30-year retirement. If we translate that into dollars, that means you should have a nest egg of approximately $1 million. The average boomer at retirement age has less than $100,000 in savings and is planning to live off Social Security benefits.
Many boomers are still paying off mortgages.
Regardless of the exact number of baby boomers who have a nest egg set aside, Fannie Mae reports that over 51% of this demographic is still making a monthly mortgage payment at retirement. When you consider the average monthly homeownership cost is about $1,200 and the average Social Security benefit is $1,461, something must give.
A recent increase in the standard deduction, while great for most people, has become a hindrance for those wanting to get a tax break by filing an itemized tax return.
Now, advisors are recommending you consider refinancing to obtain a lower monthly payment or even downsize to a home that meets your new lifestyle. Either way, financial advisors agree you need to examine your options and decide while you’re still working and can negotiate the most profitable outcome for your future.
If you have substantial equity in your home, a reverse mortgage may be in your best interest. Homeowners over age 62 can borrow against the value of their home, receiving either a lump sum or fixed monthly payments. There are several types of reverse mortgages available, but proceed with caution because all options are different.
Baby boomers are working for the dream of retirement.
Whether the intention is to earn an income or to fulfill a sense of self-worth, most retiring adults plan to maintain some form of employment. The most common reason people keep working is to prolong a needed income and maintain health coverage, with the newest wave of Medicare beneficiaries choosing to stay in the workforce and pursue their passions. By either cashing in retirement accounts or selling homes, boomers are finding the money to chase their dreams.
Statistics show that baby boomers are working into their golden years, and collectively, their next challenge is entrepreneurship. In fact, many retirees are deciding to open and own their own businesses. As the workforce continues to age, by 2024 we can expect 25% of workers to be 55 and over. Even with the dedication of the boomer generation, we can expect to feel the impact of the labor shortage: There aren’t enough skilled Gen X and millennial workers to step in and fill the roles currently held by the baby boomers.
Tips for baby boomers headed for retirement.
Creating a personal budget will allow you to be aware of spending and saving. By prioritizing your financial goals, you set a plan for success. It’s best to save for retirement funds, get out of debt and pay for long-term care insurance before you start contributing to a college fund for grandchildren. Remember to evaluate your healthcare options. Prepare yourself for the costs of insurance in retirement.
When planning, try to estimate the amount of money you need in retirement and the amount of money you want. Taking time annually to review your savings and calculate your financial forecast will give you peace of mind as retirement approaches. Reviewing investment portfolios on a regular basis can help you stay on track with a diversified approach. The general rule of thumb is to be able to replace 70% to 90% of your income. Of course, this is always dependent on your personal retirement goals.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.