Originally posted at rgj.com by Brian Loy, the Reno Gazette Journal, April 28, 2021.
I used to think that 10,000 Baby Boomers turning 65 years old every day until 2030 was astounding. However, that rate is only going to increase with subsequent generations from 11,000 a day for Gen X to 12,500 a day for millennials, then tapering to 11,300 a day for Gen Z until 2085. Policymakers will need to address issues unique to the aging of America including Social Security, Medicare, lifestyle, health care, living centers and more. However, we’ve got to individually do our share to prepare for retirement, live life on our terms and not be a burden to others as we age. Here are three potential challenges:
Do you have enough to retire and stay retired?
Online calculators can be helpful to evaluate your “retirement readiness” but they have limitations. The general guidance of funding for 80% of your pre-retirement earnings may not be relevant to you.
► Retirement cash needs aren’t generally a straight line; trends may resemble a “smile” — high at the beginning before settling into a groove, then increasing from health care needs.
► Will a major expense be gone, such as mortgage payment? Or will you move residences?
► What about inflation or additional costs such as travel, family support, home maintenance, auto repairs, health care or caregivers?
► Business owners: Will some business expenses become personal (e.g. health insurance, vehicles and continuing education)?
► What if you or your partner live longer than expected?
► You’re great at saving money, but how do you convert your accumulated nest egg into cash flow that will last a lifetime?
► When do you take Social Security benefits; or if you have a pension, which survivor option do you choose?
What are you retiring to?
Some retirees have full calendars and find it hard to believe they could hold down a job full-time and pursue their other interests including family, travel, hobbies and volunteering. Others find retirement one of the most challenging transitions one makes in life — shifts in control and sense of purpose, social connections and engagement. In his book “New Retirementality,” Mitch Anthony discusses the importance of practice and mental preparation, and that the advertised life of leisure isn’t what it’s cracked up to be. He writes about the dangers of golfing every day (my apologies to avid golfers): “First you get bored. Then worse, you become boring.” The moral is not about golf — but rather “don’t become boring.”
What about … ?
There are a number of other considerations and wildcards that may be in your future.
► Expecting an inheritance? Baby Boomers are estimated to transfer $3 trillion to heirs and charities.
► Running a family business, managing out-of-state property, have more than you’ve ever managed (think Lottery winners five years later) or your marriage gets shaky?
► How about an obligation? Kids or grandkids moving home or caregiving for a loved one? Or perhaps you’ve been delegated the thankless job as successor trustee or executor for a friend or family member?
► If you have more wealth than you need, then what about transferring wealth during your lifetime to family and charities? You can’t take it with you.
► Who is your back up if something happens to and you’re the primary money person in the family? How will your spouse be assisted to steer the ship if she or he finds themselves suddenly alone?
► What actions do you take to reduce your tax bill?
Have a plan and periodically update it, because life is curly
Life can get complicated. Think about your life and the different pieces that need to be woven together — such as cash flow, taxes, legal, investing, insurance, debt and benefits. You may require experts. Get your chiefs at the fire and develop a coordinated plan to help you make the best financial decisions for your present and your future.
Know where you’re at and where you’re going. Once you have your road map, periodically check your progress and make adjustments along the way. Sound overly simplified? That’s what your trusted advisers are for. May you have sage advice and secure your future wisely.