As a Daily Money Manager, I help seniors stay independent and manage their financial lives. The senior population continues to grow in numbers. According to the American Medical Association, 78 million Americans turned 65 in 2010. That number is expected to rise by 3 to 4 million each year. Coupled with the largest recession in decades, some Boomers have had to delay retirement. The good news is that Americans are doing a better job paying down debt. Forbes reported that we’ve reduced our average credit card debt from $16,383 (March 2010) to $14,517 (March 2012).
However for the Boomers edging toward retirement, their “golden years” may be marred with a life of debt. Baby boomers are a diverse bunch; some plan to travel throughout the world, while others want stay home and enjoy family life, reconnecting with their spouse, kids and grandchildren.
In either instance, you’ll need money to pay day-to-day living expenses. If you don’t have it, you’re going to suffer in the long run. As a daily money manager for my clients, I see that credit card debt and student loan debt can be irksome or even debilitating. If you or a loved one is preparing for retirement, here are some things to consider to make your retirement dreams come true:
Trim Down Debt
All those Baby Boomers who don’t have credit cards, auto loans to repay and own their home outright make the transition to their “golden years” easier and simpler. Entering your retirement age without any debts is ideal, and eliminates common stressors. But if you belong to the other category where you owe a huge amount of debt, you should immediately set a financial goal to cut down or trim down the debt level. Get help from professional debt relief companies if you can’t do it on your own.
Keep Boosting Savings Account
Baby Boomers have a record of living longer than the previous generations. That means retirement savings will need to stretch over more years than generations past. Living on a fixed-income means less wiggle room, especially for paying on variable rate debt like credit cards or equity lines of credit. Sock away as much money as possible, boosting your emergency fund to give you peace of mind.
Penny & Pound Wise
Unless you decide to start a second career in retirement, you won’t have the same income earning potential as you did when working full time. As your income potential is most likely finite, you’ll want to examine your spending habits. It doesn’t mean going without the necessities or living like a monk. However, you’ll want to cognizant of how your spending affects your short- and long-term retirement reserves.
An Orderly Estate
According to a survey done by RocketLawyer, nearly 71% of adults under the age of 43 do not have a will. And 41% of aging Boomers do not have one. So, if you haven’t already created an estate plan, get one sooner than later.
In retirement (or the years approaching it), your investment strategy should change. Now that you have less time to make up for loss, you’ll want to examine your investment portfolio’s risk and allocation. The saying “don’t keep all your eggs in the same basket” is a wise one for a reason. Talk to your financial advisor about spreading assets among various options.
An Income Boost
As you reshuffle how your portfolio is allocated, you may be able fill an income gap. If you are entrepreneur minded, there may be a way to make your home’s Internet connection generate income through sites like eBay and CraigsList.
As with any plan, it takes concerted effort. I highly encourage you to talk to your professional advisors — CPA or tax preparer, financial advisor, estate planning attorney — to figure out how to best plan for your unique situation. Then share your strategies with your Daily Money Manager or other professional who helps you with managing your day-to-day finances.
You (and your loved ones) will be glad you did.