Monday, November 6, 2017
5 Financial Concerns for Baby Boomers
Last week we jumped into the world of Millennials here at Budget Boss. They have a whole different economic reality than their parents. Unlike their parent’s, they have a far longer time horizon to figure out where they stand. As a Millennial and the son of 2 Baby Boomers, those born from 1946-1964, I can appreciate the concerns of both generations. This week will be about the Boomers here at Budget Boss and we will try to tackle their financial needs. Much like their Millennial children, they have serious financial concerns as well. They are the children of the “Greatest Generation,” the people who lived through World War 2 and much of our society has been geared towards them over the past 40 years. Despite that, all of their wishes have not been fulfilled and issues exist. In this post, we will jump into 5 financial concerns for the Baby Boom Generation. Younger people should pay attention too as these concerns are just around the corner for you.
At the end of the Baby Boom in the 1960’s, an era of general prosperity was ushered in. More people being born means more jobs needed and therefore growing levels of productivity. Manufacturers were bursting at the seems and in turn offering generous compensation to their employees in the form of pensions and benefits. Baby Boomers are uniquely qualified in seeing the rise of the employer-sponsored retirement and the subsequent decline of it as well. What this has created for some, is a false sense of security when it comes to retirement. Companies downsizing, uncertain markets, government restrictions all have added to the problem. While 79% of Boomers surveyed said they are saving for retirement, 52% said they may have to delay it. Some even feel they will never retire. This is definitely troubling.
Solution: As I mentioned last week during my chat on Millennials, an uncertain market affects us all greatly. The difference between the Millennial and the Boomer is time. For the Baby Boomer, they need to really focus on what their retirement options are. Finding out where you stand is important and using the help of a retirement specialist is key. Everyone has options, it is just a matter of knowing what they are and choosing the one best for you.
2) What will retirement actually look like?
In my opinion, retirement is more of a state of mind as opposed to the physical act of not working anymore. Where will you live when you retire? What kind of lifestyle will you have in retirement? What will you do to occupy your time? Will you have the money for it? These are all questions that the Boomer is now being forced to answer. Some wish to live close to amenities like the park, the movies, the supermarket or the senior center. Others wish to be out on the farm closer to nature. Both of these wishes have a price tag and it is essential to understand what daily life will look like during those times. During your working years, everything was so complex, and yet so simple. Work hard, make money, take care of everyone around you. When you are retired the concerns change. How will I enjoy this time off that I have earned and how will I make my money last longer than me? Where will I live and who will be nearby? These are all topics that need to be addressed.
Solution: Have the conversation with those around you about what you want to do in retirement. Let them know your wishes and take the concrete steps to put them into action. Again, it may require the help of an expert in the field, so do your research. Think of all the possibilities and address all the concerns you have.
3) Health Care Costs and Concerns
The good news for Baby Boomers is that you are living longer. The bad news for Baby Boomers is that you are living longer. Huh? Yes, living longer is better than dying younger, but it raises a whole new set of concerns. Living longer means that Health Care costs become an issue. The major issues like Heart Disease and Cancer are still top of the list for seniors. Other ailments like Dementia and Alzheimer’s are becoming more and more prevalent. If you experienced health concerns while you are younger it will be more likely that you will experience them as you get older. Is living near a medical community a wish of yours? Do you have the support nearby, ie: family or friends, that will help you if you become ill? Who do you wish to handle your affairs should you become unable to? Can you afford the out of pocket costs that may arise as you get older? These are of great concern to Boomers as they are seeing or have seen the health issues their parents faced.
Solution: Look to answering this health questions by taking control of your health with the help of your doctor and financial advisor. Covering your bases isn’t difficult, as all it requires is an open and frank conversation. Having a will, living will and a contingency plan is well worth the time spent. Anticipate health issues instead of reacting to them.
A growing number of seniors are retiring with debt. This is extremely troubling. The rise of the consumerist society has hit the Boomers hard and the effects are drastic. The introduction of home equity loans and ever-rising consumer debt is what is causing many Boomers to consider a delayed retirement. One of the most prevalent issues I hear of is the paying down of the Family Home before retirement. A growing number of seniors have to make mortgage payments well into retirement and this can put a huge dent in retirement savings. Add to that the rising levels of credit card debt among seniors and you have a tough pill for some to swallow. Getting debt under control before retirement is essential to being comfortable in your older years and this requires making sure you are not spending more than you are making.
Solution: As always, I advocate the use of the budget. Make sure inflows are greater than outflows and you will be alright. Also, work to aggressively pay down debt before retirement. Every dollar spent paying down debt is a dollar that could have been used later in life. In fact, that dollar might have been 3 dollars 30 years from now, so think of it as robbing from your future self. Talk to someone about debt and retirement and you will better for it.
5) The Kids
Having kids brings its own set of special concerns. They pretty much have been a money drain on you for their entire lives and it was your wish that they become self-sufficient. Now as they get older, many Boomers are worried about what they will leave behind to their children. Many also worry if their children are able to help them as they get older. As mentioned during Millennial Week, younger people have a special set of challenges that are making their lives more difficult. Will they be able to step up to the plate and take care of you when you need help? Is their debt situation under control? Are they taking the steps to make their retirement dreams a reality and put themselves in a better position than you are in? These are questions that are concerning many Boomers as they enter the final phase of their lives.
Solution: Have an open and frank conversation with your children about the concerns you have moving forward. Finances, health, security, and wealth transition should all be broached. Speaking openly will make the conversation less difficult. Remember, you love each other and that is why these are important issues.
Taking the right steps leading up to retirement is essential to experiencing the retirement you wish to have. Addressing the concerns when you still are able to do something about them is key, as waiting can make your options less appealing. Make sure you are completely on board with the plan and don’t be afraid to ask the difficult questions. Answering the difficult questions will make the smaller ones extremely easy to handle.
Thanks for tuning into our post today as Baby Boomer Week begins at Budget Boss. Don’t forget to tune in tomorrow as we discuss the sandwich generation and their concerns. If you want help analyzing your plan, please message me at email@example.com. Have a great day friends!
“The great thing about getting older is that you don’t lose all the other ages you’ve been.” – Madeleine L’Engle
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