Between the years 1946 and 1964, around 78 million Americans were born and this generation came to be termed as the baby boomers. Undoubtedly the hard work of the boomers contributed a lot to shape the US economy in the last 40 years but this entire generation is approaching their retirement age. It was in 2006 that the first few baby boomers crossed the age of 60 and immediately 4 million baby boomers are not set to turn to their retirement age (60) year after year throughout the next 2 decades. The way we thought about retirement was entirely changed by this huge population as majority of the safety programs which were there in place for the previous generations have all disappeared as the boomers are nearing their retirement. There was always a dire need of a new strategy for generating income, which should be strikingly different from that of the parents of the boomers. Read on the concerns of this article to know how retirement planning has shifted focus and some possible solutions to their issues.
Changing lifestyles might mean increased expenses for the retirees
Previously, retirees were satiated with simply “getting by” during retirement but now the boomers usually wait for their retirement so that they might get an opportunity to live the lifestyles that they’ve dreamt of and pursue their hobbies so as to get a steady source of income. There are many seniors who see retirement as the best time to indulge in shopping for gadgets, plan some trips with their family and also enjoy the money that they’ve earned. In a nutshell, nowadays, the baby boomers are more interested in leading an active and productive lifestyle. More activity will certainly mean more spending and this will need effective retirement planning.
Are the boomers living longer?
Yes, with the improvements in the medical facilities and the lifestyle that the boomers lead, the baby boomers who’ve reached 60 in the year 2007 might be predicted to live for another 23 years. In fact, there are instances when retirement lasts for 4 decades or even more. As the life expectancy has become longer, this would certainly mean that retirement income is needed to last longer lest the retirees fall in debt. The cost of living of the seniors has also increased and so the impending retirees require saving more. To avert the financial risks from ruining your retired life, you need to pay more attention to retirement savings and building your nest egg.
Transforming savings into income – The new retirement issue
Previously, both the baby boomers and the financial advisors have focused their efforts on accumulation of wealth. No previous generation has ever required to perform this feat of saving money and this is the reason behind this vexing issue among the boomers. The previous generations didn’t have to live solely on their savings and so there’s nothing from which the present generation boomers would learn the secret of transforming savings into income. The question that immediately comes to your mind is how much savings should you spend every year. Don’t scrimp too much as this will deprive you of living the life you’ve dreamt of but on the other hand, you shouldn’t overspend too. So what is the option?
Creating your own pension plan to make your retirement income last longer
In order to ensure that your income lasts throughout the entire retirement phase, you might consider having a steady source of income to fall back on. How about replacing the former company pension plan and replace it with a personal pension plan. Finding an advisor is perhaps the first step to income planning and there are improved models that will help you create a personal pension plan. Take into account your life expectancy, the cost of living and inflation, the tax obligations that you owe, the type of assets that you own and your lifestyle.
Low income, relying solely on Social Security benefits, making it to Medicare and continuing with some kind of job are what comprises the retirement age. Take the required steps to ensure leading your retired life in the best way possible. Avoid incurring debts and take debt relief steps to eliminate them as soon as you start accumulating.
Anjelica Cullin is an aspiring financial writer. A resident of Kansas city, Missouri. She has been contributing to many finance niche blogs and sites for last couple of years. Ms. Cullin is a guest contributory writer of our blog.
