Baby Boomers falling short on retirement savings

Strategic Wealth

A new report shows that baby boomers are struggling to have the proper amount of retirement savings in their retirement plans that would allow them to retire. Mike Reeves, wealth management advisor of Strategic Wealth Designers  joined the newscast to talk about what’s occurring and how retirement can be saved with proper financial planning. “The report shows the average baby boomer has only saved $144,000 for retirement.  That’s going to be very difficult to get you through 20-30 years of retirement. Medical expenses can really add up and that amount saved really doesn’t afford you enough money to go out and do anything you might have on your bucket list in retirement,” Reeves said.

The report from Yahoo Finance notes that the average baby boomer household should take their current salary and times that number by 10 to give a baseline of what they need to have saved for retirement. If you are making $100,000 a year, you should have a $1,000,000 saved for retirement to feel confident you will be able to maintain your desired lifestyle in retirement. The lack of savings in 401K’s or other investment accounts isn’t exclusive to the baby boomer generation but it’s the most concerning because they have the least amount of time to make up for the shortfall. Reeves says proper financial planning with the right wealth management company can make the difference between difficult retirement years and retirement truly being golden.

“You’ve got to build a retirement plan, financial planning isn’t something you can put off and say ‘I’ll do that later’, later will sneak up on you and force you into working more years that you wanted to,” Reeves says. “Nobody wants to retire and change their lifestyle in retirement from an income standpoint. You retire and the next day you don’t want to have to start living off of 30% less than what you were while working, to avoid that build a financial plan with a fiduciary financial advisor now.”

For many baby boomers, pensions have largely gone away and social security should not be counted on as a sole source of income in retirement. Reeves says tax planning can also be critical to ensure your golden years go as planned. “Many people do not realize there’s a window, typically from your late 50’s until when you hit required minimum distribution age of 72 that you can do a lot of conversions in lower tax brackets that could mitigate a lot of your tax burden,” Reeves said.  “It goes back to planning, if you have a financial plan for this all along the way, you can sail right through without issue, but when you don’t save and you don’t plan, it creates problems.”

Where possible, tighten the budget, save more and spend less. The younger you are, the more time you have on your side to get retirement right. Reeves doesn’t envision the government stepping in to mandate any spending limitations but encourages viewers to govern their own finances judiciously. “Keep a balance between enjoying your current life and putting back money into your 401K, IRA or other investment accounts you may be building. Your older self will thank you when you don’t have to continue working into your late 60’s or 70’s,” Reeves said.

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