There are 10,000 Baby Boomers turning 65 every day, and more than 52% of them plan to continue working after they retire. A recent AARP study found that more than half of workers ages 65 to 74 classify themselves as “retired and working”.
Many Boomers were hit hard by the Great Recession causing them to withdraw money from their 401(k) account, take a loan or increase credit card debt. Many are struggling to recover, with almost half of today’s retirees having already worked or planning to work in retirement.
For many, changing this picture will be a long road – studies have shown that only about 1/3 of boomers have saved enough for retirement and 80% of people in the 60 to 75 age range could pass a basic quiz on how to make their nest eggs last throughout retirement.
We can help.
We believe that just giving people general information on how to prepare for retirement is not sufficient. We must deliver better education in three areas:
- Assessing longevity and health issues: Pre-retirees first must consider how long they are likely to live. A good start is the Social Security Administration’s Life Expectancy Calculator to begin to get a ballpark estimate. This will give people a realistic look at how long their money will have to last. Pre-retirees also must consider the implications of health on how long they will be able to realistically work. Studies have consistently shown that 40 to 50% of retirees report that they retired earlier than they planned.
- Understanding Social Security: Many that are approaching social security age do not consider their options when it comes to taking Social Security. Many simply believe that it is best to “take it now before it runs out”. What they don’t know is that there are hundreds, if not thousands, of different options for taking Social Security and the workers at the Social Security Administration cannot advise them on their best options. In many cases, it will be best to continue working or begin drawing on retirement savings before starting Social Security payments. Working with an advisor, experienced in Social Security can help maximize the amount that an individual will be able to withdraw over a lifetime.
- Setting a Realistic Budget: Even at this time and state in life, financial success still comes back to being able to realistically allocate resources. Many pre-retirees must still face down how they are going to pay off their mortgage, fund kids’ college education, or eliminate other debt. The other wild card is planning for health care costs. In some cases, this can be expected to be a third of a retired couple’s discretionary income. This can be mitigated with a Health Cost Estimator that can give a personalized assessment of expected monthly health care costs in retirement. We can help people with this type of tool.
Please note that these opinions are our own and do not necessarily reflect those of LPL Financial or Global Retirement Partners.