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?
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