The financial news for millions of baby boomers is not the brightest. Boomers are living longer, but with rising health care costs and low interest rates, the ability to generate enough retirement income is getting more and more difficult. While most workers are saving some money in 401(k) plans, it is not likely enough to support the retirement envisioned. While the outlook is bleak, there are some steps that most workers can implement to help them redefine their retirement.
A great first step is to envision working longer. Stay in good physical shape and extend your work life. The results can be dramatic. For example, delaying the receipt of Social Security benefits for 8 years increases the monthly payment you receive by a whopping 76 percent! The additional time also allows more contribution to 401(k) accounts.
If you do have a 401(k) account, be sure to perform regular maintenance on your account. Keep an appropriate mix of stocks and bonds; additionally, focus on funds that have low fees. Over time, higher fees just eat into your wealth accumulation. If you are investing in individual retirement accounts (IRAs), make sure your fees are low there as well.
Another approach to managing retirement income is to investigate the use of an annuity. You will want to ensure that you have a strategy for generating monthly income that avoids spending too quickly or being too tight. Some annuities can help in this regard. Additionally, if you own a home, consider the prospect of selling and downsizing to develop some additional sources of income.
Finally, stay informed and active. While drastic cuts to Social Security and other benefits are unlikely, it is essential to remain vigilant with elected officials regarding proposed changes to benefits. The focus should be on easing the path to retirement and ensuring that the American Dream remains in reach for all workers.