Nicknames: The Sandwich Generation, Baby Boomers
Financial Challenges: Supporting their elderly parents while also supporting their children, facing uncertain retirement, incorrectly planning for their retirement
Likely born: between the years of 1946-1964
“The boomers will be the first generation to truly blaze the trail through the landscape of retirement in the 21st century.” – Mark P. Cussen, Investopedia “How Boomers Will Change the Way Others retire”
There sure has been a lot written about the baby boomers, a fact that’s unsurprising seeing as they currently account for approximately 26% of the population. The boomer generation changed the way we think about the world, how fast it can and will grow and continue to represent a huge part of our history! So it’s no surprises that there are major concerns in regards to the well-being of such an influential generation. As boomers reach retirement age, the rest of the world will finally be able to witness a ‘coming of age’ unlike any before. With all the info circulating out there, it’s easy to become overwhelmed.
But in the company of so many others, you’re certainly not alone.
So boomers, here we go. Let’s take a look at the decade you’ve been dealt, and how to make the most of your finances as you continue on your financial journey.
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Understand the Terms/Means of Your Retirement
The projection of what retirement looks like may not actually match with the reality of retirement. Even if you’ve planned it out, done everything you should have, and even dreamed of the life you’ll lead after you leave work for the last time, there’s not guarantee that you’ll be living exactly as you had envisioned. Understanding the means of your retirement, and living within them is essential.
A few ways to ensure that you enjoy the benefits of retirement and maximize the cushion of your savings:
- Make a budget and stick to it. Retirement has assumed the mythic ideal that once you’ve reached a certain age – you’re off the financial hook. Nothing could be farther from the truth. Though you may think you’ve saved enough money to cover your living expenses, the only way to ensure that you do is to continue keeping a budget – with the mindset that you might be pulling from a non-replenishable source.
- Make concessions if you need to. Just because you’ve imagined a certain retirement doesn’t necessarily mean it will follow your plan entirely. Remain flexible, but focused. Maintain goals, but realize that they may shift depending on external factors. Above all, value your direction, but be willing to change lanes if need be.
- Redirect your expenses. It may not be the most exciting plan to divert funds for upcoming vacations into your retirement fund, but if you’re behind on contributions, delaying your vacation can help to amplify your savings. Knowing the means of your future also entails understanding the impact of your present spending habits. Pausing large expenses, or looking towards the longer term goal can give a bit more financial breathing room as you approach your retirement.
Consider All Your Options
Pension? Social security? 401k? There are several different areas where you may have savings stowed away for your retirement. But as important as contributing to a retirement fund is, be sure to take stock of what the numbers look like. Not all savings plans are created equal, and you should make sure to check on what your numbers are doing even if you think you have a good idea. Tune into all your saving resources before mapping out your financial plan. Understanding what numbers you’ll be dealing with as you near retirement will be helpful as you work towards you retirement.
Go beyond social security. The average monthly payment for social security is $1,300 – or 15,600 a year. Is that enough to support your current lifestyle? Even with health costs, kids and unexpected life events thrown in the mix? If you’ve been planning to retire with only social security, then you’ll need to consider how you might be able to supplement that cash flow. Even if you start late in the game, opening up or continuing to contribute to an IRA is an option.
Research and calculate. Continue to punch the numbers as you approach your retirement. Using calculators to understand what kind of income will be available to you as you near or enter your retirement will be extremely useful as you track or plan for your future.
Consider what expenses might be cut or lessened
Change location. Living in more modest surroundings is also an excellent option. It’s frightening to think about ‘giving-up’ what you’ve had for (potentially) the majority of your life. A house full of memories isn’t necessarily something that’s easy to give up, but moving to a smaller home also has potential benefits – lower monthly payments or more money for your savings account, and less upkeep expense just to name a few.
Another option to avoid diverting too much of your budget to housing costs is to rent extra rooms, or think about subleasing part of your home.
Reassess lifestyle choices or habits. Though you may be a creature of habit, some patterns might cost you more than you realize. By reassessing what kinds of expenses might be maintained out of habit rather than out of need, you may be able to find pockets of extra income by cutting back on them. Phone costs, brand costs, areas of lifestyle inflation are good places to get started.
Don’t assume that downsizing, or changing habits is a negative thing. It’s undoubtedly difficult to change your patterns, or look towards making shifts towards a more modest lifestyle, but your needs and wants may have inflated over the years without you ever noticing. It’s not about giving things up, but rather rethinking if they hold the same value as you think.
Stay Savvy With your Finances
Retirement may mean saying goodbye to a job, but it shouldn’t mean saying goodbye to your financial savvy. If you’ve run a tight financial ship so far, then continue to do so. Don’t slip up just because you’ve passed a milestone. That’s not to say that you shouldn’t enjoy a well-deserved retirement, but keep up your good habits as you do.
Be Wary When It Comes To Credit Cards. Though younger generations may be bogged down with student loan debt, Baby Boomers are no strangers to debt. Credit card debt is a very real issue for someone of any age, and can be particularly challenging for those nearing retirement. Don’t take on credit card debt if you’re feeling pressured financially, particularly if you know you won’t have the means to pay back interest on top of principal.
Check in regularly with your financial records. Monitoring your financial activity in addition to things like your credit report and investments can allow you to catch and correct mistakes quickly. If you do notice any suspicious or unexpected activity, then take the measures to check-in and ensure that everything is as it should be.
If you’ve been more lax in your financial planning, now is the time to really, really put in time and attention to your finances. If you’re retiring, make sure that you’re sticking to your pre-planned budget to avoid financial stress in the future. Account for costs associated with health care, with unexpected emergencies, and in particular, the numbers in your retirement account.
Hold Tight To Your Identity
Most financial dealings have moved, or are moving, away from the traditional and and now geared towards online banking and online financial strategizing. Though a convenient way to access information more quickly and easily, it does open up users to potential threat if personal financial information isn’t protected properly.
Before entering any sensitive information (including social security numbers, any financial information, or personal information) make sure you trust the accredited site. Don’t make yourself vulnerable to identity theft by inputting personal information without knowing how it will be used, and how it will be protected.
In addition to protecting yourself online, make sure you’re skeptical of those pushing plans via marketing phone calls, and verify the identity of a company before giving out personal information.
Retirement May Have To Be Pushed Off… And That’s OK.
The age for retirement is not set in stone and should be considered flexible to your specific needs. Although you may have dreams of retiring at the projected age of 60-65, if you’re not financially ready for the years to come, you may have to put in a few extra years to get there.
It’s not necessarily the most desired option particularly if you’ve already put years of dedication into your career. But if you don’t have enough to retire – then don’t. If you’re physically able, and have the ability to stay on your employment for a bit longer, consider doing so. If you’re rapidly approaching the ‘deadline’ of your career, it might be tough advice to hear – it’s even tough to write – but adding a few extra working years to your career before enjoying the benefits of retirement can really make the difference between a cozy retirement and a tight retirement.
Take Care of Yourself
Don’t forget to include a very important part of your future budget – your health! It’s necessary to anticipate the price of medication and medical bills. Even if you’re currently the epitome of health, medical expenses can be astronomical, and eat quickly through savings. Begin to budget for potential health costs by researching and understanding what some common costs may be.
In addition, to help avoid costly future health costs, it’s important to make your current health a priority. Ignoring medical problems will only create a larger problem, so don’t put off checking out health issues once you’ve noticed them. Even if the costs seem high, preventative care can be invaluable if it prevents or catches larger health problems before they become too much of an issue.
Don’t depend on Medicare alone. The cost of healthcare will likely go beyond that offered as you enter retirement. Though you may not fall in the average cost category, it’s a good idea to set out your health costs as a non-negotiable expense as you create your budget. If you’re a few years away, a dedicated savings account for medical care may be a smart move. Having to assume debt to pay for medication is a last resort, and one that can be avoided by planning.
You can only hope to help others if you help yourself first. A huge concern of the baby boomers is that they’re also a part of the sandwich generation, and pressured from the generations on either side for financial assistance. That’s why it’s so important to maintain a sense of personal purpose and well-being as you approach your retirement. Even if you’re debt free and financially independent, if others are taking away from your savings and retirement fund, your finances aren’t independently supporting your own needs. Establish that you can live comfortably, and independently for your projected future, before taking on another responsibility.
Recognize Your Accomplishments
Be proud of what you’ve done and accomplished. You’ve gone through the gamut assessments and scrutiny during your highly publicized generation. Now you’re continuing to explore and establish what will be fact and what will be fiction for the baby boomer’s legacy. Though you’ve come a long way, it’s clear that you will never stop learning and will continue explore and grow as a generation. So even with uncertainty, and even with the spotlight, be proud of what you’ve accomplished so far!
Credit For Image 2 Robert Neff
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