By the year 2030, all Baby Boomers (persons born between the years 1945 and 1964) will be age 65 or older. Baby Boomers are living and working longer than previous generations, but they also face rising healthcare expenses and costs of living. If you’re a boomer, we have some information you might want to check out regarding your retirement plans.
To start, it’s important to know what has changed regarding retirement. The expected lifespan has increased from previous generations. As a result, long-term planning will have to account for a possible longer period of retirement. This could mean putting away more money sooner, adjusting your lifestyle to live within your means, or staying in the workforce longer before retiring. Healthcare costs have continued to rise as well which could mean you’ll find yourself paying higher costs over a longer period of time than your parents did.
In addition to changes in the timing of retirement, life itself after 65 is changing. It’s becoming more common for older Americans to have second or third careers. According to the U.S. Bureau of Labor Statistics, about 40 percent of people age 55 and older were working or actively looking for work in 2014. That number, known as a labor force participation rate, is projected to increase the fastest for the oldest segments of the population—most notably, people age 65 to 74 and 75 and older—through the year 2024. There are two-way benefits to staying in the workforce longer. Many folks find it rewarding to stay engaged full-time in a field they’re passionate about, and organizations can benefit from experience they can bring to the table. Other people over 65 gravitate toward part-time work, leaving them more time to spend with grandchildren and other family.
Regardless of whether or not people desire to stay in the workforce, it may not always be possible for everyone to keep working. Sometimes health-related issues or family issues can make staying active in the workforce difficult. It’s important to have plans for alternative scenarios you may find yourself in during your retirement years. If you haven’t started saving for long-term healthcare or looked into possible needs for long-term healthcare insurance, you need to factor it into your plans.
Beside healthcare costs, the retirement picture itself has changed in terms of income. Compared to the Greatest Generation, Boomers are relying less on employer-provided benefit plans such as pensions and are relying more on personal responsibility for wealth accumulation and retirement planning. This shift means that every retirement decision you make is all the more important, as you are the person most responsible for your future lifestyle.
In summary, revisit your retirement plans, goals and timelines early and often. Make adjustments sooner rather than later. The more diligent and timely thought and planning you put into your financial choices, the better prepared you’ll be for the future.
© BancorpSouth 2020