According to the Pew Research Center, the oldest members of the Baby Boomer generation came into retirement age in 2011, and for the next 19 years, 10,000 more boomers will turn 65 each day. The Boomers face unique challenges as they approach retirement.
Unlike their parents, most Boomers are not able to rely on pensions and savings to financially sustain them in retirement. The financial hurdles that baby boomers face require them to rethink their strategies for retirement planning.
Retiring Baby Boomers Need to Take More Responsibility for Their Finances
Previous generations were able to rely on pensions to provide a fixed monthly income in retirement. However, with pensions becoming less common, this is not an option for many baby boomers. Those approaching retirement age are finding that they are solely responsible for funding their own retirement.
However, lack of savings is another issue that the baby boomer generation faces. Many people who are approaching retirement age are continuing to struggle to make ends meet in this economic climate, while some are just not contributing enough to their 401(k) or investing effectively. Though their parents may have made saving a priority, many baby boomers do not have much saved. According to one survey, 33% of boomer participants had less than $50,000 saved for retirement.
Boomers May Consider Working During Retirement
Many baby boomers are finding that they must continue to work full-time, or at least part-time after they meet retirement age in order to sustain themselves financially. According to one survey by CareerBuilder, 75% of participants who are at or near retirement age said that they put off retiring because their finances were still recovering from the economic downturn.
Though many baby boomers will find themselves working as they approach retirement age, this is not necessarily negative. The CareerBuilder survey also found that more than half of those polled plan to continue working, just not at the same company, and 28% of participants said that they wanted to continue working because they enjoy it. This suggests that some baby boomers will continue to work and may even use this opportunity to find a new career.
Boomers Need a Good Retirement Plan
Though baby boomers face many hurdles that their parents did not have to deal with, this does not mean that they are doomed in retirement. In fact, one survey shows that 97% of baby boomer participants said that they were satisfied with their lifestyle in retirement. The key to finding this satisfaction is to make a plan before jumping into retirement.
It is never too late to start planning for your retirement. Many people in the baby boomer generation have found strategies to make the most of their retirement income. Though retirement may not look like it did for your mother or father, there are still ways to find fulfillment in this exciting next phase of your life.
Boomers Need to Balance Their Own Needs With Those of Their Parents and Children
Many baby boomers are also part of the sandwich generation – people whose time and money are used by dependent children as well as aging parents. Here are three ways to alleviate the stress of being pulled in so many different directions:
- Have a good plan and understand your priorities
- Maintain open and honest communications with family members about your own finances and theirs
- Look at all financial options, including using your or your parent’s home equity to meet financial demands
Boomers May Need to Tap Home Equity
Baby boomers have an extremely high rate of homeownership. This category of wealth may be a financial lifesaver for many. Your home equity can be used to help fund retirement in a variety of ways, through downsizing, home equity loans, or through a reverse mortgage.
The trick is knowing when and through which method to tap your equity.
Boomers Retiring Now Need to Plan for a Very Long Life
Today, the average baby boomer life expectancy is 83 and the average 65-year-old man has a one in four chance of living until 92, while the average 65-year-old female has a one in four chance of living till 94.
Baby boomers are health conscious and medical advances are extending our life spans all of the time. So, even if you work into your 70s, you might still need to plan for a retirement that lasts 20 years or more.
