BOOM! Retirement Advice for Baby Boomers
August 25 2016
All baby boomers need retirement advice – just take a peek at these stats. Pew Research Center noted that baby boomers would be retiring at an average rate of 10,000 per day from 2011 through 2030. Many of these newly retired boomers will be relying on Social Security for a hefty portion of their income, although the Social Security Administration suggests this income should account for 40% or less of income for retirement. These stats aren’t heartwarming or very promising of long sabbaticals in Florida, as Social Security beneficiaries could be facing benefit cuts before 2034.
So what’s a baby boomer to do? Here are 3 simple yet effective tips.
Budget
If you’re still some years from retirement, you still have time to save – start budgeting for your retirement account now. For those just beginning retirement, this may mean budgeting a bit differently than you have in the past – you won’t be picking up extra hours on the clock or waiting for that holiday bonus. Roughly, each baby boomer will receive about $1,300 per month, or $31,000 per year for married couples. Hopefully, this won’t be your main source of income, and you’ll have something like a pension to withdraw from (more on that below). You’ll need to evaluate your finances and budget – expect to have a limited, less flexible approach. Get a handle on your monthly expenses with an online tool or software, allocate enough for your health care expenses (expected and unexpected), and ensure you and your adult children are on the same page about you covering some of their expenses, or vice versa.
Withdrawal Plan
Don’t give into the temptation to burn through your retirement money – you don’t know what might come up (family matter and healthcare costs, for starters). Before retiring, educate yourself on the tax implications for your state (regarding Social Security benefits, property taxes, and so on) and know what your tax responsibility is for making withdrawal from your retirement accounts. By now, you probably know that a withdrawal from a Roth IRA is free from taxation, while a traditional IRA requires to make a minimum withdrawal by 70 ½ and you will need to pay taxes.
Expert Advice
Not all tax related matters require a professional, but let’s call this one of them. Your finances for your senior years are crucial, especially as family life changes (read: new babies, marriages) and inevitable changes to your health, will affect your budget. We recommend letting someone who knows all of the ins and outs double check your numbers and give a second opinion on budget matters.
Don’t be a statistic – that $1,300 per month won’t get you an Alaskan cruise or fund your new birdwatching hobby. Plan ahead as soon as possible – like now – before you complete your last day of work.
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