Baby boomers are people born between 1946 and 1964, and they are heading into retirement. Along with aging of this generation comes lots of evidence of the lack of preparation for their last stage of life.
Poor preparation and lack of knowledge about financial planning combined with life without a good employment paint a dark picture for many people. Below there are five trends that represent retirement of baby boomers.
Plan for retirement yourself
Traditional pension plan can only cover 30% of baby boomers, and it will only cover 11% of people born in the 1980s. Therefore, many baby boomers have to rely on themselves and their retirement accounts. They should calculate how to minimize fees, invest wisely and how much they can spend monthly after retirement.
Longer life spans
According to recent findings, men who will turn 65 in 2030 will live six years longer than men who were 65 in 1970. Women will also live four years longer than women in 1970.
The good news is that the gender gap in life span is decreasing, and a big decline in the number of women who become widows is expected. However, it also means that baby boomers will have to save up more to cover their longer lives.
Baby boomers can also enjoy better health during retirement. For example, in 1998 over 43% of adults older than 80 reported poor health, while in 2012 only 34% said they have serious health problems.
Better health means increased quality of life during the retirement years as well as improved financial situation. They don’t have to spend a fortune on medical care to keep independent at older ages.
Baby boomers stay at work longer
Baby boomers tend to work longer than any generation before them. Only 45% of men between 63 and 64 were working or looking for a job in 1944, while in 2014 this number was 56%.
Women tend to work even longer and the number of employed women aged 62 to 64 increased from 33% to 45% over the same period of time. The reasons mentioned about such as better health simply allow people to work longer. Others have to stay at work to bring more money into their 401(k) plan. Working is one of the things that you have control over.
When you work longer, you will get more benefits like accumulate more savings for your retirement, get more from Social Security and spend more during retirement.
Baby boomers carry more debt
Many baby boomers enter their retirement with debt. Many seniors still have to make mortgage payments in retirement. In 2012, older adults owed over $24,000 in debt. As a result, they have to pay for previously carried debt and not for retirement.
Part of their income always goes toward monthly debt payment instead of being used for themselves.
Here’s what to do now…
Contact Calvert Investment Council to get a comprehensive plan, and a strategy for your money that will help you enjoy your retirement worry free. Call 410-435-3270 today or simply click here to request online.