As a Boomer bringing up the rear, I have had the advantage of watching and reading about all my older Boomers. Per the media Boomers are so wealthy, Boomers have so little saved, and my all-time favorite Boomers have ruined the world. Baby Boomers are defined as those born between 1946 to 1964. I almost missed being a Boomer by about 3 years. However, I have never related to Generation X. I am a die-hard Boomer. I think like them, I talk like them and I live like them. Boomers are my peeps and I am the last of the Boomers to begin to enter into retirement.
Even though the Millennial Generation overtook us in July 2019 we are still a force to be reckoned with. We are still hanging in the labor force; I am not planning to retire until I am 65. In fact, some of us anticipate working beyond 65. In 2018, 29% of Boomers ages 65 to 72 were working or looking for work, outpacing the labor market engagement of the Silent Generation (21%) and the Greatest Generation (19%) when they were the same age, according to a new Pew Research Center analysis of official labor force data. We still have more living and spending to do. We as Boomers have a spending power of $2.6 trillion. That is a whole lot of buying power.
Last of The Boomers Working
I am still working and spending. At my age I don’t have a lot I want to buy. However, I do enjoy great vacations and also being able to buy whatever I want whenever I want. However, it is tough out there for many of my peeps. 64 percent of workers between the ages of 45 and 74 have seen or experienced age discrimination in their workplaces. (Source: Kelly) If you have a job try to keep your job. There are other opportunities for Boomers such a gig work or becoming an entrepreneur. We have tons of experience and there are no limits to the need for our wealth of knowledge. Boomer gig workers make $43,600 a year on average while working 25 hours a week. (Source: AARP)
Besides, many Boomers like myself prefer freelancing to a traditional rat race. It allows for the flexibility of working when I want and not to be tied down to a rigid schedule. I have worked most of my life for others and now I want to work on my own projects using all my experience to help myself and others. I am more excited to get up for work than I have been in a very long time. In fact, 32 percent of baby boomers would choose freelancing flexibility over a traditional 9-to-5. (Source: TD Ameritrade)
Last of the Boomers and the Economy
Throughout the years’ Boomers have weathered the ups and downs of the economy. Some of us better than others. I and my family took a page out of fiscal pages from President Clinton. When President Clint decided to balance the budget and build a surplus, we followed his lead and did the same. We paid down our debt, balanced our family budget, and built up our savings. I may not agree with all of his policies but this one put my family and me on the road to financial freedom.
We paid off our credit card debt, student loans, and our car loans. We are currently working on paying off our home to retire comfortably. It all started with a budget and a dream. Of those households with debt, baby boomers held an average debt level of over $110,000. (Source: Stanford) I am grateful that we are not in this group and planned accordingly not knowing if the little we were doing would make a difference in our future.
Saving for Retirement
From the time I first heard about saving for retirement and 401k plans, my husband and I participated. We were always grateful for the employer matches and/or multiple contributions. When we lost jobs we almost always rolled over the funds to our new company or into a program suggested by our financial advisors. We have been with Greg our financial advisor since he started preparing our taxes. He has always been trustworthy and had only our best interest at heart. We speak with our advisor every 6 months, but last year when the conversation started I pivoted to retirement.
As I moved closer to the date I wanted to retire, I began working on our retirement budget. This required me to create a vision – begin retirement planning with an actual budget. A budget that would not underestimate retirement income. Americans between age 65-74 on average spent about $55,000 per year. 60% of respondents say they will need less than that to live on per CNBC. The budget I created is much more realistic as I am budgeting for over that amount.
I looked at all of our current expenses, then I called Social Security. Next, I asked how much would I receive if I retired at 62, 65, or 70. I calculated the loss of benefits we would lose vs. the benefits we would receive if we waited until 70 to collect. Needless to say, if you have enough saved to support you in early retirement you can collect benefits later. However, I wanted to do the reverse. I wanted to work until 65 and then collect because the numbers worked for us. Our budget calls for my husband to collect at 62. Right now, 47% of Baby Boomers are already in retirement. We are eager to join them in the near future.
However, if I did not plan to work a regular job what does this do to our investments? Greg advised us that we could still hit our retirement goals with the current balance within the next 5 to 7 years. Perfect! We are all set. With only 55 percent of Boomers having any money saved for retirement. (Source: Insured Retirement Institute) It looks like we are in great shape. This may seem bad but many Boomers have pensions where having retirement savings is not required. I know many family members that have great pensions to live out their retirement comfortably. 61% of Boomers expect to receive a pension when they retire per CNBC.
Without a pension for us, the key to our retirement plan hinges on going into retirement debt-free. We plan to pay off our retirement home in the next 7 years. We have already downsized and are almost ready to head into the sunset.
The Last of the Boomers and Healthcare
We Boomers feel like we will live forever because at our age we are in better shape physically than our parents and grandparents. However, we cannot overlook the cost of healthcare. This will be a major expense that we cannot afford to underestimate. We have to factor in the cost of healthcare and long-term care costs. If we plan to live off of social security, we are hoping to use our investments to cover long-term care. In about half of all married couples over 65, one partner will survive to at least 95. However, we will be looking into comparing our retirement budget with purchasing long-term care insurance. We must cover all of our bases.
Meanwhile, let’s look at the cost of actual healthcare. According to experts the estimated cost for healthcare after age 65 is $295,000 per couple. This does not include long-term care. At 65, we will be enrolling in Medicare which is currently included in our retirement budget. Without knowing how things may change I have this cost over-estimated for now. Hence, I hope we will be covered but one never knows with the current state of the country and healthcare. However, I have spoken to many older Boomers and my Mom from the Silent Generation about healthcare costs. I have also worked in the insurance and financial space for nearly 20 years so I think I have a good handle on this expense. Anyway, we plan to budget and adjust accordingly.
Here is the Eight Take A-ways:
1. Reduce debt as quickly as possible – Start today
2. Save as much as you can at least 13 to 15% of gross income
3. Downsize now – we have way too much stuff others can use
4. Contact social security to get a benefit estimate
5. Check the status of your pensions if you are fortunate to have one.
6. Consult your financial advisor on the health of your retirement savings
7. Overestimate your expenses when creating your budget
8. Research the cost of healthcare and Long-term Care
Additional blog posts:
Happy retirement to the last of the boomers!
Let’s Budget, Spend, and Live
Anyone who does not provide for their relatives, and especially for their own household, has denied the faith and is worse than an unbeliever.