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Maybe Not So Golden Years?

The roughly 77 Million Boomers in the U.S. are aging. No news in that statement. For the record, the youngest Boomers (those born at the back end in 1964) are turning 50 this year. The oldest boomers, born in 1946, are or will soon be 68. So even those front-end Boomers who have delayed social security and IRA withdrawals to the max will need to begin mandatory IRA withdrawals by 70 and will have maxed out their delayed social security benefits by that time as well.

So with many of the Baby Boomers now moving into the first stages of their “golden years”, the Strumings question of the day is: will they be ready? Will their years be golden, bronze or pewter, or worse? Are things not so booming for all Boomers? As in most things in life, it kind of depends on 4 important issues:

1. Health—Always issue #1

Health is always the primary issue as one ages. The average 65 year old has a life expectancy of 20 years, slightly more for females, less for males. Therein lies the dilemma. Many Boomers will live 10+ years longer than their parents did, but may have not saved to do so. Also Boomers need to consider the strong likelihood of the need for long term care at some point in the lives. Have they insured themselves or set aside funds in anticipation? So in this case, a healthy person with an average-to-better life expectancy really needs a plan for how their money will last over a longer period of time.

2. Savings

Were Boomers wise enough to save through their 401k, IRA, savings or for those small and decreasing # of Americans, do they have a pension? Or did they live their lives to the max always at or slightly beyond their earnings.

3. Financial obligations to others

Children and/or their own aging parents could be placing a financial strain on Boomers cutting into the ability to save. Obviously any financial obligations beyond themselves place a strain on Boomers’ ability to fund their own retirement.

4. Continued employment

Will they Boomers continue to work, full or part-time, out of need or desire. A sub issue is whether they control their own financial and work destiny or will they be placed on the “ice float” and sent down the financial river by their company.

Interestingly the biggest fear among Boomers is now outliving their money–61% according got a recent survey by Allianz Life Insurance Company were more scared of outliving their savings than dying. Post Boomers (aged 44-49) were even more scared. And rightfully so if savings is not a part of one’s financial plan.

Ironically, all overblown fears of “death panels” aside, the financial downside of greater life expectancy is the uncertainty of how long and far the dollar needs to be stretched. It’s great to have a plan, along with assumptions, but the bottom line is this…best to plan for the unexpected, whether that’s a long and healthy life, or unfortunately one requiring medical care. But with any large demographic group one should be wary of making too many potential false assumptions–see 3 Myths About Baby Boomers.

And while on one hand, the Yiddish expression, “Der mentsch trakht un got lakth” (Man Plans, God Laughs), may be 100% correct and was obviously not penned by a financial planner, there’s absolutely no downside in planning for the unexpected if Boomers hope to achieve some gold in their golden years. For this “there is no other hand”.




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One Comment

  1. Holly Murs says:

    I agree with what you said here. Indeed, these four factors have a great influence over what kind of life a person lives in retirement. I suggest that everyone consider all of these as you prepare for your golden years. This is very practical and timely so we featured it in our Weekly Digest. You can read it here http://www.ltcoptions.com/weekly-digest-retirement-challenges-ltc-women-options-ltc-coverage/.

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