Baby Boomer Retirement Plans and Retirement For The Baby Boomer Generation
As a baby boomer, there are many things to consider when planning for your upcoming retirement. Planning for retirement is not as easy for this generation- not only are life expectancies rapidly increasing, but many of you are financially facing both their upcoming retirement and the possibility of funding college education for their children, or even caring for your aging parents. Planning for so many major expenditures can pose a challenge for members of your generation.
In addition, this generation’s retirement vision differs greatly from generations past. While previous retirees were content living quiet lives after retirement, baby boomers have plans to see the world, explore new opportunities, spending their days enjoying more time with family members, friends or even enjoying their current hobbies, or trying new ones.
When Traditional Pensions Are No More And Social Security Is Shaky At Best - How Do You Plan For Retirement?
Traditional Pensions No More
Most industries have done away with traditional pensions or defined benefit plans, a form of payout which is often provided to an employee based upon their years of service and recent annual earnings. Instead, companies are switching to defined contribution retirement plans, such as the 401K or 403B.
Here are some tips to help you leverage an employer sponsored, defined contribution plan:
- Invest as much as your personal household budget will permit on an annual basis, in the form of pre-tax dollars.
- If your employer offers a matching program for your contributions, be sure to invest at least to this level. For example, if they match 3%, dollar for dollar, be sure to contribute at least 3% of your gross annual earnings into the plan. After all, this is free money.
- Allow time to be on your side. Start investing early and allow compound interest to help build your retirement savings.
- Do not count on your employer’s contributions to be sufficient for you to achieve your retirement goal. Develop a financial plan based upon your own personal contributions, allowing any funds that your employer contributes to be extra.
Social Security Questions
Is social security going to be enough to cover your retirement income requirements?
While this income stream provides much needed funds during retirement, most individuals and families do not find it to be sufficient to meet their financial needs. You can review your estimated social security payment on your annual statement, by calling your local social security administration office or by requesting information on the agency’s website. As a baby boomer, you need to be focused on building your own retirement plan, outside of what Social Security often offers in order to fully fund your retirement needs.
Health care is one of the top concerns for many current and future retirees. First, be sure to review any retirement health plan options offered by your current employer. Next, review your Medicare options and the possibility of obtaining a gap insurance policy, a policy which has been designed to cover the gap between your health care needs and what Medicare provides.
Next, review private insurance options designed to cover potential short term or long term health costs during retirement, such as long term care. There are a variety of options available which can be used to plan for long term care, hospital costs and even to help you to cover the costs of prescription medications should these costs become a factor for you or your spouse.
Proactive financial planning is the best approach for addressing any and all baby boomer retirement questions and concerns. With careful planning today, you can enjoy a comfortable retirement tomorrow.