Much has been written about the inadequate level of saving by Baby Boomers in America. Not a day goes by when you don’t see an article on the difficult road faced by aging boomers, who have not saved enough for retirement
As a certified financial planner who works with people approaching retirement I am familiar with the challenges. I also am aware of some excellent strategies that can help Baby Boomers get back on track. Boomers face an array of obstacles on their path to financial independence. Ironically, the fact that people are living longer and longer creates a unique set of challenges. According to the National Institute on Aging, in Japan, the current leader in longevity, life expectancy is now 83 years old!
In 1900 most people did not live past age 50. Most people were worn out from demanding physical labor and they retired because they had to –they did not live long after retiring. There were no Happy 100th Birthday cards.
Not only are people living longer, predictable sources of retirement income have become scarce. Traditional employer-sponsored pensions have all but disappeared for most workers. And even though many people now have 401(k) plans, saving to them has become extremely challenging. Wages (adjusted for inflation) have been stagnant since 1980 while costs for college and health insurance have escalated dramatically.
The deck appears to be stacked against boomers.
To improve the possibility of building financial independence most boomers need to focus on strategies that improve their odds. Some steps worthy of consideration should include:
- Paying off mortgages by downsizing their home. Possibly moving to an area with lower living expenses.
- Considering how to enjoy their life more by focusing on the things that cost less.
- Finding a way to generate some income during retirement.
- Exploring ways to maximize Social Security and government programs.
Last, and most importantly, working with a financial planner who specializes in retirement planning, and who approaches this retirement from a holistic perspective.
We need to keep reinventing ourselves. Retirement presents many opportunities to explore new passions or to dust off neglected dreams. What are the things you always wanted to do? Perhaps you would like to write a book, become a painter, teach others, give back to your community or family in some meaningful way. Many people discover that retirement is an opportunity to discover new interests, especially because they have the time to explore.
In our work as “retirement” planners we encourage clients to explore what really gives them a sense of satisfaction and fulfillment. In future posts, we will examine different aspects of building a personal plan for retirement.