Baby Boomers – the generation born between 1946 and 1964 – are quickly approaching their retirement years. However, there is a frightening trend emerging: many do not have the funds they need to retire.
According to statistics gathered by a recent Willis Towers Watson survey:
- 25% of Americans plan to work past the age of 70
- 33% are postponing their retirement indefinitely
This situation begs the following questions:
How Bad is the Pending Retirement Crisis?
A 2015 survey by BlackRock found that most American’s ideal retirement income was $45,000 per year. The average 55-65-year-old participant, however, had only accumulated enough in savings to provide a fraction of that amount – $9,129 per year. If these statistics are true, the retirement gap is indeed enormous, which leaves a large portion of the population aging – and scrambling to play catch-up.
Why is There a Pending Retirement Crisis?
There are a multitude of reasons for this retirement crisis. Baby Boomers were the first generation of the modern era that benefited from a strong push toward preventative medicine and health promotion. Therefore, it’s not surprising that life expectancy has increased by more than five years over that of previous generations. Greater debt is another problem unique to the Baby Boomers; a recent report on household debt found that, compared to 2003, today’s consumers in the 65+ age group have
- 47% more mortgage debt
- 29% more automobile debt
In addition, previous generations avoided student loan debt entirely – but Baby Boomers accrued $2.8 billion in 2005 to $18.2 billion in 2013.
How Do We Catch Up?
Investopedia.com offers these strategies:
- Start funding your 401(k) to the maximum
- Buy into long-term care and disability coverages at inexpensive rates while you’re in good health
- Open a Roth IRA
- If possible, build equity in your home
- Downsize if you can’t build equity, then put the savings into your retirement account. A lower mortgage means the investment will grow faster.
Baby Boomers who have failed to adequately save for retirement are at a definite disadvantage. However, if they get help making plans, it’s not an insurmountable obstacle. To discover more ways to save money for investing and meeting your retirement goals, connect with us today.