Boomer Retirement Tips

Baby Boomers are becoming aware that they are experiencing a different type of retirement than the previous generation.

Compared to other generations, these confident and independent Baby Boomers admit that:

+ They need more money than their parents' generation to live comfortably.

+ Their generation is more self-indulgent than their parents'.

+ They will be healthier and live longer.

Most Baby Boomers (the cohort of Americans born between 1946 and 1964) believe that they will still be working during their retirement years. The oldest, born in 1946, will reach 62 in 2008 as they begin retirement age over the next 20 years.

8 in 10 Plan to Work at Least Part-Time

Eight in ten say they plan to work at least part-time--and others envision starting their own business or working full-time at a new job or career--according to an AARP Segmentation Analysis: Baby Boomers Envision Their Retirement.

The fact is older boomers, those born between 1946 and 1955, had a median household net worth of just $146,050 in 2001, according to an analysis of Federal Reserve data by AARP. Half of this net worth was accounted for by savings accounts, mutual funds and other financial assets with the rest tied up in home equity.

Financial stress is the dominant theme of a Putnam Investments survey of 2,000 people who retired between 1998 and 2002. Some 70% said they wished they had saved more, and 59% regretted they didn't start investing earlier to meet their higher-than-anticipated expenses.

According to a survey by John Hancock Financial Services, the average 401(k) participant expects to retire at about 64 1/2 years old. That's up more than three years from a 2002 survey, and up nearly five years since 1995.

If these workers carry through with their plans, they would reverse a 50-year trend toward earlier retirement. According to the Bureau of Labor Statistics, men retired at an average age of 62 between 1995 and 2000, and women quit at 61 1/2. In 1950, the average retirement age was 67.

Governments and companies around the world are shifting retirement risk to individuals. The troubling news is that neither workers, retirees, nor the financial world are adequately prepared. Few Americans realize how long they can expect to live, or how much retirement will cost. Don't expect to rely on the government or your former employer as you plan for your retirement years. There will still be a safety net, but proceed as if you are on your own.

Today, many seniors have been forced back to work by financial need. The impact of the new global economy and the financial effects of the lengthy bear market on 401(k) plans have affected thoughts of retirement. A staggering half of households headed by 50-to-59-year-olds have $10,000 or less in their 401(k) accounts even as public and employer retirement benefits are being trimmed. With little net worth to fund retirement, there is now an exodus out of retirement to working. Most are healthy go-getters who would rather work than scrimp and save in an idle retirement. By 2015, estimates the National Council on the Aging, 20% of the U.S. work force will be over age 55, up from 13% in 2000.

This "phased retirement" of Baby Boomers will shape the American workplace and compensate for a severe talent gap due to a shrinking supply of new workforce entrants. Phased retirement will allow Baby Boomers to engage in work they enjoy while providing needed income.

Managing money well is important. But for many people, the most important investment they can make during their working years is in gathering the skills, education and contacts they need for the work they want to do in retirement. Start today asking yourself what kind of life you want to lead? What do you want to do?

Before retirement is the time to dream about what you would love doing--and--invest in that dream by being specific as to what, where and how to make your dream a reality.

If you are about to retire, now is the time to get smart by shaping your phased retirement and deciding how you want to live the rest of your life.

Visit Blogging Boomer Carnival #149

Check out what happening in the world of Baby Boomers at this week's carnival hosted by Fabulous After 40.