To officially qualify for baby boomer status, you must have been born between 1946 and 1964. This is the generation that statisticians refer to as the “pig in the python” because of the way the graph shows birth rates between those years.
The line was flat through the Great Depression and World War II, but then, when the soldiers came home from making the world safe for democracy in 1945, they did what comes naturally, and the rest is history. The impact the baby boomers have had, and are still having, on the world’s economy is profound. Expanding families needed new houses, cars, TVs, etc. As a consequence, the post-war American economy grew like a tall tree – one which has been offering shade and produce to the rest of the world for decades.
The generation that gave us rock and roll, the space race and flower power is retiring. Is it any wonder that so many commercials on TV are aimed at the gray-haired segment of the population? It’s where the money is! It’s no wonder that the bookshelves and magazine counters are overflowing with advice on retirement. Have you noticed how many cable TV channels and radio talk shows are devoted to financial planning?
We’re experiencing a retirement advice avalanche that started in the late 1990s. Based on the reports, as many as 10,000 baby boomers are turning 70 years old every day and now must dip into their tax-deferred retirement accounts. All those of us in this generation (to include yours truly!), are making financial decisions that will affect the quality of the retirement journey for three to four decades. The need for education and making the right financial choices is greater than ever.
I remember seeing a framed poster on an office wall once with the words “PLAN AHEAD” on it. What made the sign unforgettable was that all the letters were the same size except for the last two, which were smaller and closer together. The ironic inference was that the sign painter had run out of room due to lack of planning.
Sadly, most baby boomers spend more time planning a two-week vacation than they do planning their financial futures in retirement, which will most likely last three decades or more. When researchers ask baby boomers if they are ready for retirement, the answers are not encouraging. That’s why you need to listen up and keep reading.
Will you contribute to the statistics of the “unprepared” for a dignified and successful retirement journey free of the challenges you will undoubtedly face during retirement: outliving your money, skyrocketing inflation, unpredictable interest rates, stock market fluctuations, unknown tax environment and skyrocketing healthcare costs. Added to these challenges is the good news challenge that brings bad news – longevity.
Longevity increases the potential of facing long-term care needs with that annual bill averaging $92,000. Couple this with the recently released Fidelity report indicating a married couple in retirement for 20 years will have to fund over $260,000 of out of pocket healthcare costs, which includes Medicare part B premiums, Medicare supplement premiums and co-pays and deductibles. This does not include vision, dental and hearing. That’s what the hype about retirement is all about.
So, what do you do? You plan and continue to re-plan as the world turns and changes. Stuff happens! We need to continuously re-plan for more than the challenges mentioned. Life events, health issues and lost income will impact the journey. Don’t ignore the elephant!
The majority of financial planners are not addressing longevity and the need for integrated retirement planning. Longevity begs the need for deliberate customized strategies to ensure you mitigate the risk of running out of money before you run out of time. It’s not about investing your retirement savings; it’s about planning while using an integrated approach.
Are you navigating your retirement journey with a collection of financial products, or a hodge podge of brokerage accounts and financial statements that are not driven by a plan? Planning is a discipline and investing is an activity. To manage the retirement challenges we’re talking about, you need an integrated approach to retirement lifestyle planning: You need a customized tax plan, an income distribution plan, a healthcare plan and an estate plan. Anything short of this is simply a “one size fits all” hope for a successful future.
Hope is not a plan; it’s gambling with retirement. Don’t get caught up in all the hype about buying the latest and greatest financial product. Protect your journey through a disciplined approach to retirement planning, and let’s DERAIL THE HYPE!
Ponte Vedra Beach resident Jeannette Bajalia is the president of Petros Estate & Retirement Planning and the founder and president of Woman’s Worth, LLC, which offers a complete range of retirement lifestyle protection planning® services customized for women.