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Baby Boomers and their Unique Challenges

Baby Boomer Advice

Simply put, baby boomers are those who were born between the 1940s and early 1960s. With about 78 million of these today, they have a considerable impact on U.S. retirement social structures. The biggest concern for most baby boomers is whether they can afford to retire and live how they want, followed by the concern of running out of assets or income during their lifetime as a retiree?”

Here are the common challenges faced by the Boomers, which their earlier generations did not have to deal with:

Longevity:

With advancement in medical science and healthy lifestyle trends, boomers have much better odds of living longer than their parents. According to a study, a healthy 65-year-old spouse held a 75% probability of living up to the age of 95.

There is another reason for this, though. Most boomers spend their 30 years of work sitting behind a desk, as opposed to their parents, who held jobs that were more physically demanding. For most boomers, the most demanding work that required their physical prowess was the weekend golf game.

Investment Horizon:

With an increased life expectancy, baby boomers have almost 30 years of post-retirement life to live off their savings. Even with the largest and most stable of savings, one cannot say that it will be enough, given the fact that anything and everything can happen in a span of 30 years. Things like war, recessions, inflation and deflation, stock market crashes, and other events can have a profound effect on the boomers’ financial well-being.

Low Savings:

Over 60% of baby boomers don’t have enough assets to allow them to retire when they would like to, live how they would want to, yet be financially secure till they pass away. This makes them much more dependent on performance to accumulate their assets.

The frenzy of financial advisors:

To see a feeding frenzy, all you need to do is let a Wall Street advisor know that you’ve retired from your company with a $1 million IRA rollover. You won’t even need to wait till you actually retire to see the frenzy going! With news like this, advisors get interested, and make their best efforts to provide their offers, advice and products. This includes meeting the soon-to-be retirees to offer free retirement seminars. For the baby boomers themselves, this can get pretty tiresome.

Performance:

With limited savings and requirement for more assets, you need better performance to help produce the assets. And this need does not end with your retirement. Even after you retire, you might have to collect more assets or garner a rate of return which can counter all forms of erosion from your retirement assets.

Risk:

With low saving and high asset and performance requirements, baby boomers will have to take an investment risk that is significantly higher than what their parents took. This will help them accumulate assets and make sure that they last for the entirety of their post retirement life. It is not profitable to invest in a low or zero investment risk strategy unless the investor is completely certain that they will not run out of assets or income post-retirement.

Investment Expense:

In order to get the best performance, baby boomers will need to take a higher degree of risk. To that end, they will need sound advice from the best financial advice. Getting this sound advice will surely cost them, and add to the growing list of baby boomers’ expenses.

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