The results of the IRI survey reveal that Boomers have an extremely dismal view of their future prospects. But the news does not need to be entirely bad. Here are a few highlights — low lights — from the survey and what you can do to fix them. A secure retirement is still within reach.
Can’t Get No… Satisfaction…
The percentage of Baby Boomers who are satisfied with how their lives are going from an economic perspective has fallen to 43 percent, the lowest level since 2011.
In fact, boomers are less confident than they were five years ago about almost every aspect of retirement. The study finds that a “mere 22 percent believe they are doing a good job preparing financially for retirement, versus 41 percent in 2012.”
What You Can Do About It: Now is the time to take a detailed stock of your current resources and prioritize your needs and wants for the future. There is no going back to save a little more, but there are definitely ways to move forward.
Assessing what you currently have and what you might need in the future can help you see some of the good decisions you have made and that you do have options for retirement — this can be very satisfying!
Ain’t No Mountain (Savings Account) High Enough
What You Can Do About It: Maybe you haven’t saved enough, but you likely still have some really good options for a secure retirement.
- Do you own your home? If so, have you factored how your home equity can subsidize your retirement finances either now or at some point in the future?
- Still feeling pretty good? Working a little longer — either part or full time can dramatically improve your long term finances.
- Can you delay the start of Social Security to boost your monthly benefit?
- Do you know what is important to you? If you focus on priorities, cutting expenses doesn’t have to feel like a burden.
Use the NewRetirement retirement calculator to “try on” these strategies. This easy to use tool takes retirement planning way beyond savings and assets. This planner is designed to help everyone. Assess which options will give you a secure retirement.
Breaking Up is Hard to Do
Divorce is impacting Boomers’ retirement plans. Twenty four percent of divorced Boomers are, or expect to be, worse off in retirement than if they had not divorced. And, divorce by older Americans is increasing. The number of people over the age of 50 who divorce nearly doubled between 1990 and 2010.
Experts agree that divorce is financially difficult for Boomers. Susan Brown, a sociologist at Bowling Green State University, says, “Individuals who go through gray divorce are considerably economically disadvantaged, and they are a growing demographic group.”
What You Can Do About It: Assuming you are not going to work out differences with your spouse and stay married, you need to tackle the economic challenges of divorce head on to avoid some big retirement planning mistakes. You will need to:
- Arrive at a plan for dividing assets.
- Make sure that all of the details are carefully managed. For example, when splitting retirement accounts, you need to be extremely careful not to incur tax penalties. And, don’t forget to update all beneficiary designations.
- Plan for your own future. Once there is a general understanding of who gets what, each party should create their own retirement plan to help them fully envision their new financial future.
Stand by Me (Your Financial Advisor)
According to a report from the Society of Actuaries, only 50% of baby boomers have worked with a financial advisor and even fewer meet with one on a regular basis. However, the IRI study found strong evidence that financial advisors yield better finances:
- At least nine in 10 Boomers who work with a financial advisor have retirement savings, a measure which has remained above 90 percent since the inception of the study in 2011.
- More than eight in 10 Boomers who work with financial professionals believe they are better prepared for retirement as a result of that relationship.
- Among the 55 percent of Boomers with retirement savings, 58 percent have saved $100,000 or more for retirement. When Boomers work with financial advisors this increases to 78 percent.
What You Can Do About It: While it can be difficult to find a financial advisor that you trust, it is clear that they can help you have a stronger financial profile.
I Feel Good… (but Can I Pay for Medical Costs?)
Only twenty seven percent of Boomers believe they will have enough money for health care expenses. This is down another 10 percent from 37% in 2012. Medical expenses are indeed a huge concern. According to a study done by Fidelity Investments, today’s retirees will need an average of $130,000 for health care alone in retirement.
What Can You Do About It: Looking at healthcare costs can be discouraging. Here are a few ways to tackle them:
- Be sure to include healthcare costs into your planning. The NewRetirement retirement calculator does this automatically.
- Continually evaluate your supplemental Medicare coverage. Policies can change and your health needs also evolve. You’ll want to make sure everything is as cost efficient as possible. You can compare supplemental Medicare policies here.
- Stay Healthy: Medicare actually has quite a few perks to help you stay healthy. Free flu shots, good preventative care and help for healthy living are all part of your coverage.
- Get Creative with Funding Long Term Care: Insurance is only one option for funding long-term care. Once you enter your information and have an initial analysis of your retirement plan, the NewRetirement calculator allows you to try out different ways of funding the care. It can be interesting to compare your options.