By Sindy Berkowitz
Earlier this year, the Insured Retirement Institute released its annual study covering the Baby Boomer generation and its financial preparedness for retirement. Since the IRI’s first publication in 2011, the number of Americans over the age of 65 has increased over 18 percent. Yet, despite the steady incline of retired Baby Boomers, this year’s study demonstrates that this generation still has yet to find answers to some of the greatest challenges facing Americans in retirement today. In fact, only 23 percent believe they have enough saved to last their entire retirement.
This series will dive deeper into the state of Baby Boomer retirement planning, providing insights into the unique challenges ahead for the average American retiree. In addition, we will offer several ways to help you start putting your planning on the right track to ensure that you and your loved ones can maintain the quality of life you’ve worked so hard to achieve.
In Part 1, we will take a closer look at some of the biggest challenges you’ve got to address in order to ensure that your wealth lasts a lifetime.
Inflation: The cost of everything, from a gallon of milk to real estate, is subject to inflation. On a yearly basis, you might not notice the incremental price increases, but over time, inflation will degrade your buying power. As funding a retirement account is a long-term savings strategy, you must factor inflation into your planning.
Market fluctuations: Investments tethered to the stock market can offer a strong return on investment, but they can also leave you more exposed to risk. If the markets enter a period of decline as you reach retirement age, you may be forced to find other means to recover.
Medical expenses: Americans are, fortunately, living longer than ever. But that also means that retirees will likely have more medical expenses to account for as well. According to the IRI’s 2017 report, 82 percent of Baby Boomers underestimate the cost of medical expenses to come.
Income gap: Pension participation is not as common as it used to be, and Social Security will only account for a portion of the paycheck you received during your working days. Many Americans don’t realize that assured income streams may be lower than the monthly expenses they’ll see in retirement, setting them up for a gap in wages that must be recovered to maintain their lifestyle.
At The Milford Bank, we’ve helped countless individuals—from their first savings account, to retirement planning, and everything in between. We are ready to work with you to craft a saving strategy that will help you navigated the uncharted waters of retirement.
Be sure to check back next time for Part 2 of this series, when we’ll be discussing some strategies to help you avoid the challenges you face in retirement planning. You can also learn more by checking out our Online Learning Center here.