Tag Archives: Baby Boomers Retiring

Can you retire early?

Can you retire earlyCan you retire early or do you even want to retire early? The surprising answer to this question is that many people do not want to retire early for many different reasons. Some would not know what to do with themselves. Others did not start saving soon enough and do not have enough money set aside for retirement. And many more are facing mounting expenses for health issues. They may need money for supporting their kids or mortgages that they never paid off. Regardless of whatever your situation is, we think that planning for an early retirement is always a plus. You can still work as long as you want for whatever reason, but at least you have the flexibility to make your own decision about when you retire.

Can you retire early?

Have your financial planner asess your financial situation, taking into account your age, your savings, your debt and your plans for retirement. Consider this a first draft. It is ok to change it as you go. You will probably make changes anyway as you near retirement. The important thing is to have a plan and to know when it might be feasible to retire.

Let’s assume that you will have paid off your home, you will have a pension at 55 and you have sufficient savings to live the lifestyle that you want for retirement. You also have your health and this really represents the ideal situation. If you decide to work longer you have the confidence of knowing that you have sufficient income when you do decide to retire. If a health issue gets in the way, at least you will be comfortable.

On the other hand if any of these assumptions are not correct you may find that you will have to work until you are older before you can comfortably retire unless you take some steps to correct whatever the issue may be. Completing the financial plan and asking yourself Can you retire early will put you on the road to ensuring that your retirement is what you had envisaged.

Some people do not want to know the answer to the question, Can you retire early, however asking and answering the tough questions can always help you plan for the future.

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Retirees Staying in Their Homes

Retirees Staying in Their HomesIn a survey of 4,000 Baby Boomer households conducted by the non-profit Demand Institute, 63% of Boomers plan to stay in their current home once they retire. This is a huge number and is driven by a number of financial and emotional issues that we will all face one day.With more retirees staying in their homes, what does this mean for families?

The real question is when is the right time to stay and the right time to find something smaller, perhaps less expensive and easier to maintain? This is a tough question for many people since there is often a lot of emotional attachment to the home. After all it may be the home where you raised your kids, you have lived in it all your life or you may just like the neighborhood and the people who are your close neighbors. it could also just be sentimental reasons that keeps 63% of people who are retiring to stay in their homes.

Retirees Staying in Their Homes – Considerations

The most obvious question is whether you can afford to stay where you are. There is general day to expenses for utilities and care of the lawns etc. Then there are repairs that are needed from time to time and as we get older, we can usually do less and less which means that either it costs more to hire help or the house gets that run down look and the value of the home declines.

Health is another issue which affects your ability to continue with maintenance. Health costs may also dictate that the house needs to be sold to cover the cost of health treatment, unless you have lots of savings to live on.

Moving is not inexpensive. There is the cost of legal and real estate fees. The actual cost of moving and doing upgrades the costs can add up very quickly. In some markets, that condo you are looking at just might be more expensive than the house you are selling.

For many seniors it is just simpler to stay in place. Spend the money that would have gone to cover moving costs on maintaining your home. It becomes a very personal decision based on the situation, finances, emotional ties and many other personal issues. Try to work through them one by one. Remember that no decision or delaying a decision is actually a decision to maintain the status quot!

Boomers Staying Home

baby boomers staying homeIn a recent survey of 4,000 Baby Boomer households conducted by the non-profit Demand Institute, 63% of Boomers plan to stay in their current home once they retire. They do not plan to downsize to a smaller home. They do not plan to move to a condo and they do not plan to move in with one of their children. This is a surprising statistic given the expressed interest by many people that they want to sell their homes. They want to find something they can move into which gives them less work. They are looking for freedom to travel both financially and from work to maintain their homes.

Having gone through this same analysis personally we have reach the same conclusion about staying in our home. We initially thought we would sell our family home. We would find an inexpensive condo, lock the door and travel. No need to worry about upkeep and routine maintenance activities. Turns out that this dream was not practical from a financial perspective unless we were willing to lose a lot of money. Here is some more detail as to why many boomers are finding this to be the case.

Boomers Staying Home – Expensive to move

We found it to be very expensive to move as we are sure that many others have. Let’s assume that your home is worth $300,000, a nice round number. Real estate fees will cost $15,000 @5%, legal fees will cost at least another $2000. Various city taxes and fees can vary a great deal from nothing to $10, or $20,000! Then there is the physical cost of moving, even with friends helping is going to cost $500 to $1000. Of course not all of your furniture will fit in the new home. There are window treatments along with various adjustments and upgrades needed in the new home. The sky is the limit. Add your own number, but we will choose $10,000 to be on the safe side. It will probably be much more than this.

When you add all of this up the cost to move could end up between $30,000 and $50,000 depending on your assumptions. For our money we would rather put that $30,000 into our own house. We enjoy and stay in the same neighborhood that we have been in for over 25 years. We can also use some of that money to pay someone to look after the house while we are away as well. Note , if you travel, your home insurance will require that you have someone looking after your home while away. They should be checking on it at least once per week or more often.

When you work through the numbers it is evident that we are going to stay right were we are along with the 63% of the population.

Baby Boomers Retiring

Baby Boomers RetiringBaby Boomers retiring in droves and the banks are issuing study results galore about retirement and baby boomers who will be flooding the market over the next several years looking for something to do. The first wave of baby boomers turns 65 this year. As a result if they have not already retired prior to 65, then many will begin retiring this year.

The banks do all of these studies and report the obvious. Many are concerned about retirement. What will they do, do they have enough money? Will they be bored and will they go back to work? The answer is yes to all of the questions. Also no to all of the questions. It really depends on the person and the situation that they are in.

How Silly are These Surveys?

I have a neighbor who retired last year at 65. His wife has been retired for several years. She is a retired teacher and he retired from a senior job at the government. We chatted one day. He expressed the concern that they do not know if they have enough money for retirement! Well of course they do,. But it comes down to lifestyle and how they want to live their life after retirement.

So forget all of these so called surveys and focus on your situation.

Baby Boomers Retiring – Plan For the Future Now

Regardless of age (if non baby boomers are reading this post, then you should pay attention to this part), you should have a financial plan. It does not have to be complicated. Basically you need to assess what your retirement life style desire will be in realistic terms. Then map out a financial plan to help you achieve your goals.

The later you start this plan the more difficult it will be for consumers to achieve their objectives. Starting early makes it very easy. While starting at 65 really means you must live on what you have and pension income that you take in. A financial adviser can assist you with the development of the plan in terms of the numbers. However you are the one who must do the work along with your spouse. Decide what kind of life style you want and what you can afford.

Health

The bank surveys also show that baby boomers are concerned about their health and what impact their health will have on their retirement. Obviously if you are in ill health, you are not going to be able to some of the things you planned on. All you need is one serious bout of sickness to make you realize that life is precious and you had better enjoy it as much as possible while you can.

Once you have a stroke or some other debilitating problem, no matter how much money you have, you are not going to be able to do all of the things you planned on including travel, sports etc.

In Canada, medical costs do not play as significant a role as they do in the US because the government covers our routine medical costs. In the US, if you get sick and have no coverage, then you run the risk of either being totally broke or you do not get treatment and you die prematurely from something that is easily treatable.

Baby Boomers Retiring – Summary

The bottom line is plan for your retirement taking into account your life style needs and desires along with the amount of money you expect to have available during retirement. The two will have to be balanced no matter how much money you have. Apply a business like manner to managing your assets and grow them to ensure that you have what is needed for retirement. For baby boomers, it is never too late to develop your plan, however you will need to limit your objectives in order to meet your goals and objectives for retirement.

Enjoy your life now. If health issues become significant, they will put more of a crimp on your activities than money ever will, so figure out what you want out of life and go after it while you still can.

 

 

 

 

Financial Needs of Baby Boomers

Financial Needs of Baby BoomersWhat are the financial needs of baby boomers? How does one go about figuring out if they have sufficient funds saved up for retirement? Perhaps if you have a pension which will last until you die, you will be ok financially. Add government pensions and many people with pensions will be find. They may not be able to do everything they want, but they will be able to live comfortably. Baby boomers have become accustom to having whatever they want and they have the money to make purchases that their parents never could.

Retiring in Large Numbers

Now they are going to retire on mass and many of them do not have company pensions to fall back on. They have to rely on their own savings, odd jobs and government pensions which do not pay a lot compared to the cost of living these days. With so many people retiring at the same time, all of the financial companies are developing products that are designed to help the baby boomers. But are they really helping them?

All of these companies are in the business to make money and they have high overhead and that means they need to make a lot of money off of you and I to be profitable. If you are planning to retire soon and have some money to invest, be very careful how you invest and who you invest with. These funds need to last some time. So lets break the problem down for people in general terms so that you can help yourself figure out what you need to do. You may have to go over your plan several times to make everything work for you, however that’s ok, you should do this at least once per year and any time there is a major change in your finances.

Financial Needs of Baby Boomers – When to Retire

Some times you just have had enough, sometimes it is health and other times people are forced into retirement.  Pick an age that you are comfortable with for your plan. If your actual retirement age changes, then re-evaluate the plan. You might choose 50 or you may work until you are 70 years of age or even longer. It does not matter as long as you can and you are enjoying the job. Start with the age that you think is most realistic for your situation.

What income will I Have After Retirement?

The next step is to figure out what your income will be when you retire. You will have a combination of company retirement plans, government pension plans and your savings. Look up these amounts or contact your HR people to find out what to expect. If you have savings, assume that you will receive 4% income from your savings. Don’t forget to project what your savings will be at retirement.  4% is a conservative number so anything higher than that is a bonus. Add up all of these income amounts and this will be your total income before taxes.

What do I make now?

Next calculate all of your income. Your last tax statement will be a good place to look. This will be your total income that you are currently making and is a good measure of what you need to make assuming you are living within your means. You will actually need a little bit less, since it is assumed that you are not saving for retirement now since you have actually retired.

Compare your Retirement Income with Your Current Salary

As a baby boomer this is were you may be in for a surprise. Most people will be shocked when they find out that they are receiving less than they thought for their retirement. Now is the time to take stock of your situation. Possibly you will want to adjust your retirement age so that you can build up a bit more savings and also earn income longer. If you have to retire then there are plans that need to be made to ensure that you can live comfortably.

How Long will I live?

This is another big question, since it really puts a limit on how much money I will need to have to live comfortably.  If baby boomers are an average 55 today, they can comfortably assume that they will live another 30 years. That is a long time to live on savings alone if there is no pension. For those folks with a pension they are better off, however inflation can catch up with them and make things difficult financially.

You can talk to an accountant to have someone do the calculation for you. However in simple terms if you have $300,000 saved up and you are going to live another 30 years, then that is only $10,000 a year plus interest that you can take out of your savings if you want your money to last well into your 80’s.  This can be very scary for a lot of baby boomers and it is time for a wake up call to take a look at what savings they need to have.

Hopefully if you are reading this post you will have gotten something out of it. If you do or would just like to leave a comment for our readers please feel free to do so. We would be glad to have them. Note that spam comments will be deleted.