If you were born between 1946 and 1965, you’re well aware of your unique generation. Your parents made amazing sacrifices during the Great Depression and World War II, and you’ve lived through a few financial ups and downs while seeing the cost of living increase substantially. How well you are set for the future depends on when you were born, what your financial planning strategies have been up to this point.
According to a longitudinal study by the Economic Policy Institute using the most recent available figures, half of the American families in the 56 to 61 years age bracket had less than $21,000 in retirement savings in 2016. According to a Stanford University study, only 40 percent of working Americans aged 55 to 64 are participating in job-related retirement planning. Once the pandemic arrived, many workplaces stopped making employer contributions, at least temporarily.
No matter your financial situation, as a Boomer, it’s important to put your retirement goals at the top of your list. Your financial planning priorities should include saving for retirement funds, getting out of debt, and paying for long-term care insurance.
It is estimated that about 70% of 65-year-olds will need some form of long-term health care. Although it would be nice to contribute to your grandkid’s college fund, it’s more important to put your possible future needs first.
Not everyone can retire. Then again, not everyone wants to retire. If you enjoy your job, keep at it. Delaying retirement can allow you to leave your retirement savings alone and hopefully add to them.
Older workers offer a wealth of knowledge and a perspective that younger generations don’t have. You may not be trying to elbow your way up the corporate ladder, but you also may not be asking for raises, need time away from work to tend to family, or need to be on the company insurance plan if you have Medicare.
You have value. Look around your place of work and consider ways you can help that are outside your current job description. A lateral move or even a step down is better for your finances, security, and mental state than no job at all.
This may be the perfect opportunity to move from a full-time position to part-time, allowing you added freedom to pursue some of the activities you will do once you retire while still earning income and leaving your nest egg intact.
Depending on your date of birth, you may be able to start collecting Social Security at age 66. At age 65, you can sign up for Medicare which, although not free, can reduce health care costs.
You have three options for drawing Social Security. You can draw before your full retirement age and take a penalty. You can draw at your full retirement age. Or you can delay drawing your retirement until you are 70 for an increased benefit but having lost years of drawing. There are good reasons to pursue any one of these options and consulting an experienced financial advisor who can help you understand your options will ensure that your Social Security plan best fits your needs and goal.
For both 401(k) and IRA accounts, you can start making penalty-free withdrawals when you turn 59.5. There are several different strategies for withdrawing from your 401(k) and IRA accounts and factoring in the particularities of your situation with the help of a seasoned financial advisor is an important part of living out your golden years in the way you expected. Here is a quick overview of the withdrawal requirements and strategies to get you started.
Now is the time to set your financial goals and make a plan to achieve them. Reducing your spending is a good start. When you were young, you may have set goals to own a big house, now you may want to reverse that thinking.
Relieving yourself of housing costs like mortgages and debt can be a very freeing experience. Although you may have an emotional attachment to your family home, letting it go in exchange for a smaller home, condo, or apartment can take away the burdens and expenses of upkeep and big utility bills.
Moving to a less expensive section of your town or city or moving to a state with a lower cost of living is something to think about. You may no longer need to live in the best school district or close to your work.
Think about where you would like to spend your golden years. Perhaps a quiet, small town with good walkability. Or an area that offers good public transportation, so you can save on car expenses. Of course, there are also retirement communities that include many amenities and services, along with the camaraderie of fellow Boomers.
Even if you’re starting late, thinking about your goals and putting a plan into action can result in a brighter future. And it’s never too late to create or recommit to a budget that will help you plan for the goals and objectives most important to you.
References accessed on December 21, 2020:
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