PHILADELPHIA PA – From now until 2030 about 10,000 Baby Boomers will turn 65 every day, the Pew Research Center estimates. This large generation, born between 1946 and 1964, has had a huge impact on American culture and society, and that remains the same as it heads into retirement, according to the Philadelphia-based Pennsylvania Institute of Certified Public Accountants (CPAs).
If you or a loved one is a Baby Boomer, the institute offers advice on how to avoid some of the pitfalls that could prevent those in the group from enjoying a happy retirement.
Be Realistic
Fitness is a high priority for boomers, so it’s not surprising that their average life span continues to lengthen. According to the Social Security Administration, the average 65-year-old man today can expect to live until age 84; a woman until age 86.
One of every four 65-year-olds today will live past 90, and one of every 10 will live until at least 95. That means it’s important to have a solid plan for funding your retirement years. If you don’t think you have enough for 20 or 30 years, it may be necessary to step up your savings or consider postponing your Social Security payments so you receive a higher monthly amount later on.
Know What You Need
You will need about 80 percent of your pre-retirement income to cover your expenses in retirement, according to the Center for Retirement Research at Boston College. Many people who thought they were on their way to a well-funded retirement saw their investments reduced by the recent recession. The Retirement Pension Planner on the American Institute of CPAs 360 Degrees of Financial Literacy site can help you get a sense of how much you might need, and provide an estimate of when your retirement savings will run out.
Simplify
If you want to have more money for retirement, start changing your spending habits now.
Living within your means can help you stretch your money now and in retirement. A common change in retirement is downsizing from a larger home to a smaller one. You’ll want to talk with a trusted area real estate agent about how to approach that, and ways to maximize your profits from a sale.
Additionally, as you discard or give away things collected over the years, consider how many new things you’ll actually need to purchase during retirement. You may find yourself better able to enjoy what you already have.
Focus On Priorities
Saving for a second home or for a child’s or grandchild’s education are worthwhile goals, but be sure to put your retirement needs first. Remember, it’s always possible to use student loans to pay for college tuition, but there won’t be similar financing available to cover retirement expenses if your savings run out.
Don’t Give Up
If you’re near retirement, it’s not too late to create or enhance your retirement account. Remember, your money can grow tax-deferred in an IRA, 401(k), or annuity, so it’s possible to do some catching up. Many members of the ever-adventurous Baby Boomer generation are also working past the traditional retirement age, so consider your options for continuing with your current job or launching a new career.
Consult A CPA
No matter how close you are to retirement, a CPA can answer your questions and help you create a plan that addresses your short- and long-term needs. To find a CPA in Pennsylvania by location or area of expertise, see the institute’s website here.