Baby boomers are used to shaking things up. Due to their large numbers and political activism, boomers have transformed America at every stage of their lives.
Born between 1946 and 1964 and numbering more than 76 million, boomers are the largest generation born in America so far.
Doing well in the prosperity that followed World War II, Baby boomers have a reputation of being big spenders and poor savers.
Now the Great Recession has hit many baby boomers hard. They’re dealing with decreased value in their retirement funds and homes and job layoffs. As a result, the number of baby boomers who are ill-prepared for retirement is increasing.
If you’re a baby boomer who wants to retire, here are 10 tips to help you figure out today’s retirement challenges:
1. Estimate your Retirement Income and Expenses.
It’s important to have a realistic plan for retirement. If you don’t have a budget now, keep track of your expenses for several months to see where your money goes. Based on the figures, make a budget. Be sure to include money to set aside for an emergency fund of at least three to six months of living expenses. Use the pre-retirement numbers to develop your retirement budget. Remember to include things that will change with retirement such as no commuting costs, less money spent for clothes and shoes, and fewer meals out. Estimate your income in retirement as well. See Mint’s Create a Budget for information on how to set up a budget.
2. Decide When to Retire.
After you’ve looked at your projected retirement income and expenses, you’ll have a better idea about when you can retire. Part of this decision is estimating what you think the rate of inflation will be and taking a guess at how long you’ll live. Figuring out what percentage of your pre-retirement you want to live on also is important. You can find online calculators to help you or you may want to hire a certified financial planner to advise you. See the Certified Financial Planner Board of Standard’s website to locate a planner near you.
3. Keep Working or Start a Second Career
If you’ve planned to retire at age 62 or 65 but find your estimated retirement income isn’t adequate to provide the lifestyle you want, continuing to work or finding a new career are two options. In a recent study, workers in their 50s said they are likely to have to delay their retirement due to the recession, a Pew study reports.
4. Decide When You’ll Start Taking Social Security Payments.
If you decide to take your Social Security benefits at age 62 or 65, you’ll receive lower monthly payments than if you work longer. The date to receive full Social Security benefits increases annually. For example, if you’re a baby boomer born between 1946 and 1954, your full retirement age will be 66 years. If you’re a boomer born in 1960 or later, your full retirement age will be 67. Baby boomers should work until their full Social Security retirement age, or better yet until age 70, Eleanor Blayney, CFP, spokeswoman for the Certified Financial Planner Board of Standards, said in an email. If married, the higher paid spouse should delay retirement until age 70, Blayney said. See the Social Security Administration’s Benefits Calculators to estimate your potential benefit amounts using different retirement dates and levels of future earnings.
5. Decide Where You Want to Live.
If you’re like most baby boomers, you want to age in place. A new trend that could help you achieve this goal is the emergence of Neighborhood Villages. In these membership organization, older citizens are assisted by their neighbors so they can stay in the homes as they grow older. See the Village to Village website for information on where the villages are located or how to set one up. Another positive development for boomers who don’t want to move is the inclusion of provisions in the recent health care reform law to help older adults stay in their homes longer. While staying put is desired by most boomers, some may want to move to be near their children or to enjoy warmer weather. If you plan to relocate, do thorough research to find out the cost of living in the area, what medical facilities are available, and what the amenities are. If you need to make significant savings for your retirement, Blayney suggests taking a look at where you live and how much house you really need.
6. Pay off Credit Cards and Mortgage.
Since your income will be lower in retirement, it’s a good idea to get rid of much debt as you can before you leave your job. This will give you more flexibility with your cash flow and tax planning. While many Americans are challenged by credit card debt, it hits seniors particularly hard. Bankruptcies among seniors are rising sharply, driven largely by credit card debt, a study by the University of Michigan Law School shows.
7. Get to Know Medicare.
Begin gathering information about Medicare before you’re ready to retire. You’ll also need to buy Medigap insurance because Medicare only covers basic services. Be prepared to do research on Medicare and Medigap insurance. Both are complicated.
8. Learn About Long-Term Care Insurance.
Medicare and private insurances don’t pay for the majority of long-term care costs, the costs for nursing home care. You need to evaluate many factors when considering whether to buy this insurance: your health; whether the elders in your family went to nursing homes or died suddenly; whether you can afford the insurance; and if you want to leave money for your children. See this AARP fact sheet for details.
9. Plan for Out-of-Pocket Medical Costs.
Set money aside for medical costs not covered by Medicare or private insurance in short-term bonds or money markets. You could incur as much as $200,000 to $300,000. If you still have several years until retirement and are reasonably healthy, consider a high-deductible health insurance policy and set up a Health Savings Account for accumulating funds for these out-of-pocket costs in retirement, Blayney suggests.
10. Examine your Emotional Portfolio as well as your Investment Portfolio.
Baby boomers are a diverse group and their task during retirement is to find their path, Nancy K. Schlossberg, professor emerita at the University of Maryland and author of the book Revitalizing Retirement, said in an interview. The transitions of retirement aren’t easy. “It takes a while to get a new life.” Retirement is a challenge for many baby boomers. With these 10 steps boomers can begin to look at their spending and set goals for retirement.
Rita R. Robison is a consumer journalist who blogs at The Survive and Thrive Boomer Guide. Rita blogs via Contently.com.
Use the right tools. Picture hanging kits, easily available at most hardware and department stores, often have all the materials you need to hang most common frames on your walls. Light pieces like photos, movie posters, and other art will likely require just a nail, or a nail and a bracket or picture hanger (most light frames have a bracket on the back already.) Photo by 
