If you are like most Baby Boomers, you have limited
retirement savings to begin with and must learn to protect
them and make
them last. Even if you have planned for retirement and
have comfortable funds, complacency in financial management
painful results. Without active financial management
Baby Boomers could easily see their retirement savings evaporate.
Careful retirement planning, beginning with a realistic
assessment of your current financial situation, is critical
to making your investment funds, 401k, pension or savings
last throughout your retirement years. How much do you have
to work with, and how can you stretch it throughout your
retirement years? An easy way to assess your financial
situation is to look at your past year’s earnings, using
Turbo Tax for free. Once you have quantified your annual
cash flow, then you can take steps to reduce your debt and
get the best return on your earnings.
Pay Off Those Credit Cards!
One of the best things Baby
Boomers can do for themselves is to pay off all credit card
debt before retirement. Credit cards have become like
financial enslavement. Credit card companies do
everything possible to entice impulse spending, then find
ways to bump your annual interest rate to 30 percent, and
then encourage you to only pay the minimum (at which rate,
you can only escape through death). Get rid of them -
they are as insidious as nicotine-laced cigarettes!
Protect your Baby Boomer Investments,
401k's, Pension or Savings
Regardless of your Financial
situation, every Baby Boomer should develop a financial
strategy for retirement. Here are some general tips
for Baby Boomers to protect your savings:
Diversify - Don't put all
your eggs in one basket. If one part of the market
or economy goes sour, you are protected by having your
savings in different industries and instruments.
Generally speaking, think
mutual funds over individual stock ownership because
holdings are diversified. No-load funds with
management fees under 1 percent and a high Lipper rating are preferred.
Be very careful about relinquishing
control over your investment funds in exchange for a
life-time annuity. Make sure the annuity is
indexed for inflation. Also, if you later need a
large sum of money, realize that annuities are usually
sold at a hefty discount.
Avoid or fire any financial advisor who tells you to
just hang in
there when stocks or funds are
experiencing a drastic change for the worst (e.g.,
maintaining investments in financial institutions
directly affected by the subprime debacle). Do not be complacent - An extended bear
market can dramatically impact your retirement unless
your savings are proactively managed. Either get
good financial planner
who understands your needs and whom you trust, or educate
yourself and stay on top of your investments!
Remember to consider the impact of
inflation when doing retirement planning.
Fixing your nest egg allocation is more
important than chasing high returns.
Beware of scammers who call with hot
tips or speculative offers!
Most financial managers
believe that Baby Boomers moving into retirement should
employ a more conservative investment strategy to
minimize exposure to market "ups and downs." Our opinion
is to retain as much stock as you feel comfortable
(ideally in the form of diversified mutual funds)
holding to offset dips in the bonds and fixed-income
markets and grow your portfolio during good years. One
strategy to help get more cash to invest is to sell any
car that you are no longer using, as many Americans have
multiple cars that they do not drive. You can easily get
for cars at many companies and this will give you a
leg up on investing more in your future.
Every Boomer Should Make a Budget
Identify all sources of income you can
expect in retirement and develop a realistic monthly budget.
If you expect to have income from investments or real
estate, factor that in as well. Prioritize your
monthly expenses, amortizing any annual or semi-annual
Do you have enough income to cover
anticipated monthly expenses? If not, something has to
go or be reduced, or you need to increase your income.
This simple exercise may alert you to the need to
drastically alter your retirement strategy, perhaps
motivating you to take advantage of some of the "dollar
stretching" tactics contained elsewhere in this Website.
Develop a Savings Withdrawal Strategy for Retirement Income
Once your savings are allocated in a
manageable fashion, baby Boomers should prepare a withdrawal
strategy to supplement Social Security benefits and/or
pension income. This strategy should be based on
achieving the following objectives:
Optimize the amount you receive each
Protect your principle.
Minimize tax consequences.
Stretch your savings over your expected
lifetime (or as long as you can).
Baby Boomers are strongly urged to seek the
expertise of a financial planner or professional to assist
in creating and managing a withdrawal plan to supplement
Identity Theft Protection for Baby Boomers
identity theft t can result in someone
taking out a loan in your, running up charges on your credit
cards or cleaning our your bank account and savings before
you even realize something is going on.
One of the best ways to prevent (or detect)
identity theft is by periodically reviewing your credit
report to look for any unusual activity. Baby Boomers
are entitled to one free credit report every year from each
of the three national credit bureaus:
TransUnion. Baby Boomers can order their free
annual credit reports toll-free at 1-877-322-8228, or online
AnnualCreditReport.com, which is a service set up by the
three nationwide credit bureaus to help consumers review and
manage their credit histories.
You might want to stagger the free access to
your three reports to stretch your annual coverage.
Personally, we wouldn't bother with any of the credit
protection or identity theft programs being marketed by the
credit agencies...but that's just our opinion.
All Boomers Should Prepare a Will!
Nothing creates a headache for your heirs
like not having a will. Probate is a process you
should not wish on anyone. And having a will gives you
an opportunity to express your wishes for how your estate is
to be handled.
There are numerous software packages and
online sites that make it easy to prepare a legitimate will.
Simply enter "prepare will" in a search engine box and you
will get a multitude of returns.
We are not financial experts, so any
information we present here is intended only to give you some ideas.
Every Baby Boomer must make his or her own decisions about
how to best manage their retirement assets and estate. If you do
not feel qualified, it is imperative that you hire an
experienced financial manager whom you trust or take
advantage of free resources to assist you in the allocation
and ongoing management of your retirement funds.