John A. Vardalas, CAE
Founder/CEO, The American Boomer Group
Greetings Fellow Boomers…….This month I wanted to share with you some thoughts about the future and the way we may be living in our Golden Years.
Since the proposed changes to Social Security have become a national debate, many Americans are starting to think seriously about revising their retirement plans. People are now healthier and expected to live longer and with the recent unprecedented downturn in the economy and stock market losses many of us Boomers will have to delay full time retirement and extend their work life. It is no longer unusual to spend as much time in retirement as in working full-time. Many retirees are depending on relatives, government assistance and part-time work to survive. The 70-year-old at the grocery check-out is likely to be partnered with another retiree bagging groceries.
Special Challenge for Boomers
Baby Boomers will make up the largest population of retired workers in history with the longest life expectancy. Boomers will be the most diverse group of retirees. They may be funding their children’s education, supporting adult children, and caring for elderly parents. It is for these reasons Boomers will be engaging in “WorkTirement” to keep up with their financial needs.
While some Boomers have done an adequate job of saving for retirement, many wait until it is too late. People have a difficult time estimating their retirement expenses because they fail to keep track of their own spending habits.
Estimate Your Spending Habits-Give Yourself A Financial Check Up
It’s a fallacy to assume that your spending habits will dramatically decline during retirement. Many retirees travel and pursue other activities that keep themselves occupied. The first step in retirement planning is to get an estimate of your expenses—your annual cost of living. There are several ways to do this.
- Keep a journal of everything you spend for a few months.
- Compile your years expenses via cancelled checks, bills, and cash withdrawals.
- Determine your take-home pay over a period of time. Calculate what you’ve saved—what’s left will give you an idea of what you are spending.
After you’ve estimated your expenses, you’ll need to determine if your retirement income will cover your living expenses. Only one-third of Boomers save enough of what they need to retire at their income level, according to USA Today. The “three-legged stool” of retirement income consists of personal savings, Social Security and pensions has now been expanded to “five” to include maintaining good health and job skills/competencies.
It’s a good idea to get an estimate of your Social Security benefits. The Social Security administration began mailing out benefit statements to those 25 years and older in 1999. If you haven’t received yours, visit the Social Security Web site at http://www.ssa.gov
or call 800-772-1213.
If you have a pension or 401K, calculate your benefits. If a previous employer went out of business, you may still be able to claim benefits. The Pension Benefit Guarantee Corporation guarantees pensions and lists names of people that have unclaimed money due them. You can find the list at http://www.pbgc.gov.
Add up all of your personal savings and determine how much you can withdraw each year. Make sure to determine any other expenses you’ll likely have during your retirement. A recent survey indicated that two out of every three boomers think that they will be the primary caregiver for an elderly parent or family member. A nursing home can cost from $50,000 to $75,000 a year.
All of these dynamics will re define retirement and may call for us Boomers to stay engaged in work beyond our golden years. More resources on this issue can be accessed in current and past issues of Today’s Boomer magazine here.