Are You a Member of a Threatened Retiree Species?

The retirement planning experts are relentless in their gloom and doom predictions for baby boomer retirements. Sadly, the data appear to back up these pessimistic predictions. Can anything be done?

I have been a long time fan of the reports and commentary published by the Center for Retirement Research at Boston College.  The content is meaningful, accessible to the rest of us, and is not tainted by the influence of the investment industry. So when I hear from the Center that things are bad, I pay attention.

The knowledge that so many boomers have inadequate retirement savings is not new. That fact was highlighted following the crash of 2008. Now we are facing another problem: The decreasing impact of Social Security benefits. This is due in large part to the taxation of Social Security benefits which began in 1983. When the income thresholds for taxation of benefits were established by law, they were not indexed to inflation. This means that an increasing percentage of retirees will have their benefits taxed, and in an increasing amount.

Combine all of this with a decline in pension availability, many in our generation are in serious trouble.

Is it time to panic? If you are in that group of boomers who have no pension and less than $200k in retirement savings, the answer is probably “yes.” You, according to a recent article discussing all of this, may be a member of a threatened retirement species.

What do you do? If you are in good health, keep working and keep your fingers crossed that your employer values older workers.

If you have room in your budget to spend less, then start spending less. This blog and others are full of ideas of how to do that.  I didn’t have to cut my land line and start using a $19/month “unlimited everything” cell phone but I have.  What are you spending?

if you have substantial equity in your home, be prepared to cash it out, downsize and put that equity to work to provide income.

Of this I am certain: It is a mistake to rely solely on a 401(k) account for retirement after years of making only minimal contributions, or worse, partially cashing out these accounts before  retirement to pay expenses.

Read for yourself: Why Retirees Are a Threatened Species


Comments

  1. Ralph Parker says

    There are retirement planning websites i.e FlexibleRetirementPlanner that have programs that let you input your income streams and you can see how much you can spend with confidence of your resources not being depleted. Learn to use it, use it to plan your retirement spending program. If you can’t understand it, get good guidance from a professional.
    First, you should get a handle on your necessary budget requirements.
    Then you should compare your savings (401k, bank accounts, stocks, bonds) and your income streams (pensions, social security, other annuities or even a part time job) and planned major expenses to see if you have a reasonable chance of your money holding out. Else you can either earn more money by waiting to retire or by a second job. The retirement website is one I like but there are many others.

Leave a Reply

Your email address will not be published. Required fields are marked *