If you are a baby boomer, you may recall The Who’s Roger Daltrey singing about his fervent wish to die before he got old. Ironically, he had no idea back in 1965 when that song was released how much of problem longevity would be for his generation.
According to Conning Research & Consulting, a provider of insurance research located in Hartford, Connecticut, baby boomers are facing changing times because productivity gains have slowed and future wage increases have been relatively stagnant despite the hot job market.
There is also the question of the viability of the Social Security and Medicare systems in the future, as cost increases can’t keep up with inflows into these funds.
Also, baby boomers that retire can expect to have lower guaranteed monthly incomes despite their participation in defined contribution pension plans.
They are going to have to manage their assets to be sure they have an adequate retirement income. Retiree medical coverage reductions have made them vulnerable to increased health care costs, which places other demands on their retirement savings.
The oldest of the baby boomer generation became eligible for Medicare and full Social Security retirement benefits in 2012.
They began retirement with less income from defined benefit pension plans than previous retirees, but with bigger defined contribution portfolios.
The decrease in their guaranteed monthly income is making this generation sit up and take notice.
What you can do
What can baby boomers do to protect themselves from outliving their retirement money? Begin changing attitudes now. Assume that you and you alone are responsible for your financial well-being when you are retired. Once you have accepted that fact, then it’s time to take action.
One smart move is automatic deposits to an individual retirement account. Automating everything about your finances, including payroll deposits to savings plans and accelerated mortgage payments, can make for a less stressful retirement.
You don’t have to think about it again and you don’t have to worry about having the discipline that will make you save and advance pay.
Know the risks. Use tools like worksheets and online calculators to estimate the amount of savings necessary to provide a specific amount of income over your assumed life expectancy. Some good examples of retirement planning tools have been developed by the American Savings Education Council. You can find them by logging on to www.asec.org.