How are you doing?

Really, how are you doing in retirement or retirement preparedness?  This post may help you understand where you are, by sharing some insights on the overall baby boomer (these are people in the 54-72 age group) retirement scene.

Since one of my interests is retirement planning, I end up reading quite a few articles and studies on retirement.  I just read the latest Boomer Expectations for Retirement 2018 study from the Insured Retirement Institute (IRI). As you can imagine, the report was riveting and gave me quite a wake up!

This post will share some of the survey results. Those insights many motivate you to examine your personal situation, and, if necessary, make a course change.  I am not criticizing any of your retirement planning/saving actions or non-actions, just trying to help you avoid bad retirement surprises.

True or false?

First, a little true or false for you. We’ll give you the answers in the sections below.

True or false – 25% of Boomers think they will have enough money to last their full retirement.

True or false – 45% of Boomers have less than $1,000 in an emergency fund.

True or false – 69% of Boomers see Social Security as a major income source in retirement.

True or false – 57% of Boomers have less than $250,000 saved for retirement.

True or false – Boomers who use a financial advisor saved less than Boomers who did not use a financial advisor.

Basically, in this post we’ll go Facts -> Implications -> Potential Actions.

The post might be a little dry (percentages!, dollar figures!, commentary!) but I think it can help you examine your situation and take action if required.

Disclaimer – As most you should know, from reading the disclosures, I work in the life insurance/annuity/financial services industry.

Who knew that an old church in Amsterdam (actually called the new church, but built starting in 1409) would host a modern art exhibition? Here’s me with the Jeff Koons’ piece. Also, I was not the one who broke it…

blue sphere-cropped

Several days after:

Koons after

Bummer, dude…

Fact – This year’s survey shows that only 25% of Boomers think they will have enough money in retirement. (The answer is ‘true’.)

Implications – 75% of Boomers don’t feel they will have enough money to last in retirement.  The implication here is that many people’s standard of living will decline or these people will have to work long into their retirement years.  In fact, the survey says that 29% of Boomers plan to work to age 70 or greater.

Potential actions – read on, the actions to deal with this issue are covered in the following sections.


Fact – One of the survey results that surprised me most was emergency funds.  70% of baby boomers have less than $5,000 in an emergency fund; 45% have less than $1,000 for an emergency fund. (The answer is, again, true.)

Implications – If ‘something’ goes wrong, perhaps a major car repair is needed or the water heater goes, you may need to use ‘retirement’ funds (IRA/401(k)/etc) or use a credit card to pay.  This can permanently lower your retirement income.

Potential action – If you’re not retired yet, consider deferring some discretionary spending to build up an emergency fund that you are comfortable with. (I see you over there with the avocado toast and the cappuccino…) If you are retired and on a ‘fixed’ income, consider the above, but perhaps more slowly.

Social Security

Fact – 69% of Boomers see Social Security as a major source of income in retirement. I know that Mrs. No Surprises Retirement and I do! (Again, answer is ‘true’.)

Implications – If there are legislative changes to cut Social Security, your income could be unilaterally cut.

Potential action – Understand what Social Security means to you and determine what your Representative and Senators stand for on Social Security.  Call or write them to state your position.  Register and vote for candidates that support your position on Social Security and Medicare.

Amount Saved for Retirement

Fact – 38% of Boomers have less than $100,000 saved for retirement.  19% have $100K-$250K saved. 43% have more than $250K saved. (38% + 19% = 57% – answer is ‘true’.)

Implications – The lower the amount saved for retirement, the lower the overall lifetime income that can be supported.

Let’s say that you have $200,000 saved when you retire and assume you use the 4% rule (withdraw 4% and never run out of money – it’s a not entirely correct ‘rule’ but close enough here for an example) – that would give you $8,000 a year to add to your other retirement income sources.  If you’re an average couple, you’ll be getting approximately $34,000 in Social Security and with the 4% withdrawal, you’ll have a family income of $42,000.  Nothing to sneeze at, but if your budget is more than $42K (say $55,000), you’ve got a deficit.

Potential action – Know your budget requirements and your retirement income plan.  Look at how they match up.  If you have a mismatch where the budget is greater than the income, look to see how you can either cut the budget or increase the income. Consider saving more pre-retirement.

Take a look at our budgeting post here .  The Retirement Income Plan post is here here and the spreadsheet is at this link (copy and paste):

Advice? You want me to take advice?

Fact – 79% of Boomers who used a financial advisor (FA) have over $100K saved for retirement, while only 48% of those who did not use an FA have over $100K saved. (The answer is ‘false’.)

Implications – It seems like using an FA has a correlation to greater retirement savings. My suspicion on this one is that with an FA you have someone whose focus is your planning, especially for retirement, and therefore they are more likely to help you develop and stick with a plan.

91% of people in the survey felt that their FA works in their best interest.  My feeling has always been that if the FA is not acting in the client’s best interest, they are not going to stay in business for the long term.

A CFP or ChFC designation indicates the FA has actual experience in the field, they have learned and passed exams on planning, and have taken an oath to put the client first.

Potential action – If you don’t have an FA or RIA, talk you your friends and relatives to find a trusted financial advisor.  Trust me, there are a lot of tricky areas in retirement planning and having a team to advise, counsel, and assist is a good thing.

Sorry I missed you!

The last month was a busy one with work, volunteer work, and vacation.  I’m back now and hopefully you can look forward to more regular posts.  Thanks for your patience.

Actions you can take include:

-We covered this week’s actions above.

And if you have not seen the “Why you should read this blog…WIIFY” post, it’s here .

Questions, comments, or suggestions for retirement surprise areas you want to know more about?
-Leave a comment
-Use ‘Contact’, above, to send an email.

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