Are Baby Boomers out of time for retirement planning?
At first glance, it might seem like they are. They’re currently aged 57-75, meaning a good portion have already retired!¹
And those who are still working have only a few precious years to create their retirement nest eggs and get their finances in order.
Perhaps you’re in that boat—or at least know someone who is. If so, this article is for you. It’s about some essential strategies retiring Baby Boomers can leverage to help create the futures they desire.
Eliminate your debt. The first step is getting rid of your debt. After all, it’s not optional in retirement—you’ll need every penny to fund the lifestyle you want.
That means two things…
- Don’t take on any new debt. No new houses, boats, cars, or credit card-funded toys.
- Use a debt snowball (or avalanche) to eliminate existing debts.
That means focusing all of your financial resources on a single debt at a time, knocking out either the smallest balance or highest interest debt.
Eliminating, or at least reducing, your debt can help create financial headroom for you in retirement. It frees up more cash flow for you to spend on your lifestyle and on preparing for potential emergencies.
Maximize social security benefits. Delay Social Security as long as possible (or until age 70). Delaying Social Security increases your monthly payments, so it’s a simple way to maximize your benefit.
For example, if you started collecting Social Security at age 66, you would be entitled to 100% of your social security benefit. At 67, it increases to 108%, and by 70 it increases to 132%. That can make a huge difference towards living your dream retirement lifestyle.
Check out the Social Security Administration’s website to learn more.
Protect your wealth and health with long-term care (LTC) coverage. The next step is to protect your assets from the burden of LTC. It’s a challenge 7 out of 10 retirees will have to overcome, and it can be costly—without insurance, it can cost anywhere between $20,000 and $100,000. That’s a significant chunk of your retirement wealth!²
The standard strategy for covering the cost of LTC is LTC insurance. It pays for expenses like nursing homes, caretakers, and adult daycares.
But it can be pricey, especially as you grow older—a couple, age 55, can expect to pay $2,080 annually combined, while a 65-year-old couple will pay closer to $3,750.³
The takeaway? If you don’t have LTC coverage, get it ASAP. The longer you wait, the more cost—and risk—you potentially expose yourself to.
Pro-tip: If you have a permanent life insurance policy, you may be able to add an LTC rider to your coverage. Meet with a licensed and qualified financial professional to see if this option is available for you!
Review your income potential with a financial professional. The final step on your path to retirement is reviewing your income options. You want to strike a balance between maximizing your sources of cash flow and keeping control over your retirement plan.
Many retirees lean heavily on two primary income opportunities: Social security and withdrawals from their retirement savings accounts.
And that’s where a financial professional can help.
They can help you review your current retirement lifestyle goals, savings, and potential income. If there’s a gap, they can help come up with strategies to close it.
You’ve worked hard and made sacrifices—now it’s time to reap the rewards of all that elbow grease. Which of the essentials in this article do you need to tackle first?
¹ “Boomers, Gen X, Gen Y, Gen Z, and Gen A Explained,” Kasasa, Jul 6, 2021, https://www.kasasa.com/articles/generations/gen-x-gen-y-gen-z
² “Long-term care insurance cost: Everything you need to know,” MarketWatch, Feb 19, 2021, https://www.marketwatch.com/story/long-term-care-insurance-cost-everything-you-need-to-know-01613767329
³ “Long-Term Care Insurance Facts – Data – Statistics – 2021 Reports,” American Association for Long-Term Care Insurance, https://www.aaltci.org/long-term-care-insurance/learning-center/ltcfacts-2021.php