Boomer and Retirement Weekly Reader – Retirement Readiness Edition

The Employee Benefits Research Institute is a non-partisan organization that, in recent years, has communicated the bad news about how financially unprepared many Americans are for retirement. The EBRI uses a “Retirement Readiness Rating” to characterize its findings. The 2010 numbers were recently released.

< The focus is on baby boomers because we are the folks for whom the data is most valid. Here is what the EBRI said:

The baseline 2010 Retirement Readiness Rating™ finds that nearly one-half (47.2 percent) of the oldest cohort (Early Baby Boomers) are simulated to be “at risk” of not having sufficient retirement resources to pay for “basic” retirement expenditures and uninsured health care costs.

Households in the lowest one-third when ranked by preretirement income are simulated to be “at risk” 70.3 percent of the time, while the middle-income group has an “at-risk” level of 41.6 percent. This figure drops to 23.3 percent for the highest-income group.

I found it interesting that almost a quarter of even the high earners are in trouble.

You should read the entire report (available here) because it discusses the effects of different policy changes (Social Security and Medicare for example) on the retirement readiness outcomes.

On to some other reading:

Emily Brandon reports about another trend in retirement neglect: parents tapping retirement funds to pay for their kids’ college education. I have a 3 word comment: Don’t do that.

As I predicted earlier, the Social Security “do over” strategy is about to disappear. (The “do over” allowed a retiree to claim Social Security early and later pay back the benefits (without interest) and then claim a higher benefit.) According to a proposed new rule, a retiree can change his or her mind once, but only within the first 12 months of receiving benefits.

I am reading a newly published book by Ray Levitre, CFP® called “20 Retirement Decisions You Need to Make Right Now.” This book is unique in that it focuses on financial decisions that people should make when you are on the actual threshold of retirement, not years away. I know that I will agree with some of what he has written, including the chapter titled “Fire Your Broker.”

The Personal Finance Advice blog published a guest post on “Saving Our Savings” discussing the measures undertaken by a couple trying to survive unemployment without using up their savings. This could easily apply to someone trying to retire on minimal savings.

The Smarter Wallet blog published a round-up of posts on decluttering and simplifying your life. That has been a major push of mine over the past year. You should try it – very liberating.

I wrote a post for the On Retirement blog summarizing 5 Life Insurance Strategies for Retirement Planning.

Finally, there is always good stuff to read at the weekly Carnival of Personal Finance.


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