A little planning can go a long way toward seniors’ financial security

By Paul Lane CNHI

NORTH TONAWANDA — The roughly 78 million Americans born between 1946 and 1964 control more than 80 percent of the nation’s personal financial assets and 50 percent of discretionary power. They also earn more than those who came before or after then, own the largest percentage of homes of any age group and are the best-educated.

Yet, belying these federal government statistics, the Baby Boomers are the people who are in the most need of help in planning for retirement. Many want to put off the notion that they’re ready to retire — more than half of AARP’s members still work, the group reported — while recent economic woes have dwindles savings, the stock market and funds such as Social Security that were earmarked for just such people.

The solution, according to one financial planner, is for each Boomer to take responsibility for himself.

“There’s more concern now than there has been in the past about the multitude of issues people face in retirement,” said personal financial expert Eric Tyson, co-author with Bob Carlson of “Personal Finance for Seniors for Dummies.” “The key thing is to get educated.”

A survey that was conducted by Southampton College would support that claim. The survey found that 40 percent of Boomers cite a lack of knowledge as the primary reason for postponing their retirement plans, while 58 percent don’t know how much money they will need for retirement and 46 percent deplete savings for daily expenses.

To remedy that, Tyson recommends sitting down — today — and crunching numbers. And don’t be afraid to seek help from a financial planner, he said.

“You’ll reduce anxiety by getting better educated,” he said. “Most people want to retire, but they haven’t crunched any numbers to see where they stand. There’s a pretty big sense of relief once people see the numbers and realize they won’t be a pauper.”

The Southampton survey found that, despite a lack of planning, many Boomers want to remain active in their senior years. Thirty-eight percent of Boomers plan to travel in retirement, the survey found, while 27 percent intend to pursue hobbies and 10 percent intend to volunteer or work elsewhere (20 percent of Boomers, meanwhile, don’t intend to retire at all, citing the need to remain active). Nearly all Boomers (98 percent) described retirement as offering new retirement, the survey found.

"Baby Boomers have an opportunity to rewrite the book on retirement,” Dudley H. Ladd of Scudder, Stevens & Clark Inc., the investment firm that sponsored the survey, said in a release that accompanied the survey. “It’s encouraging that they have given this issue a great degree of thought and that they view the experience so positively. On the flip side, however, they risk being on a collision course with reality unless they take further steps to prepare for their retirement years. While they are not yet in crisis mode, the time to act is now.”

Ironically, Tyson said, that craving for activity is another factor in the lack of planning for many Boomers.

“You get busy with life,” he said. “Most people don’t find actually doing it enjoyable. It’s the kind of thing that keeps getting put off and put off.”

So once the decision is made to act, Tyson recommends starting with a to-do list, especially if you’ve neglected financial planning. Everything from life insurance to savings and investment opportunities should be considered, he said. Be sure to evaluate how much your pension, Social Security and any stocks or bonds might yield, and consider an IRA.

Also consider other factors of retirement unrelated to retirement, he said. The time could come when you’ll need to enter a nursing home or require other long-term care, and that could be a difficult decision for your children to make without your guidance, he said. Also be sure to maintain your health the old-fashioned way — diet and exercise — to make sure you live long enough to get to that point (looking into Medicare also plays into this, he said).

Many of these tasks can be handled individually, but don’t be afraid to get help from a financial professional if needed, Tyson said.

“Make use of professionals, but do so selectively,” he said. “Don’t do so as a crutch. Most of the stuff is not rocket science, and I think most people can do a lot of it on their own. But experts can help in certain specific areas, such as setting up a will or living trust.”

There are countless options as to how to prepare for retirement, Tyson said. But one thing that should not be considered optional is to start preparing right away.

“Don’t keep putting it off. You’re going to be able to accomplish more if you start sooner,” he said. “There’s a piece of mind that comes from getting these things in order.”

HOW TO FREE YOUR FINANCES

The AARP offers these tips to help people in their golden years achieve financial freedom:

• Get rid of debt, including declaring bankruptcy if necessary

• Build a budget

• Increase savings, even if that means altering lifestyle

• Invest wisely by diversifying your portfolio

• Keep working to build your Social Security benefit and savings

• Do anything possible to keep health insurance

• Hold off on claiming Social Security and 401(k) money

• Work with a financial planner

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