Why Every Boomer Needs a Retirement Timeline

Musings Business-3081427_1920Think about this statistic for a moment: About 10,000 Baby Boomers turn 65 every day.

In times gone by, 65 was the magic retirement age -- and it is still the magic Medicare age (that is, everyone who turns 65 is eligible to apply for the government health insurance plan called Medicare). These days, however, age 65 is just one marker on the retirement timeline. As Certified Financial Planner Dana Anspach writes for The Balance, "Certain retirement events are triggered at specific ages... As you age, the rules for specific ages change."

Since retirement is a very personal decision, it makes a lot of sense for every Boomer to develop his or her own unique retirement timeline. However, you should be aware of the triggers to which Anspach refers. It is never too early to plan for retirement (or "rewirement," as I like to think of it), but age 55 is the time to "get serious about planning," Anspach writes.

Think of 59-1/2 as the first big trigger in terms of tax implications. That's the age at which you can begin to withdraw from an IRA or 401(k) without an early withdrawal tax penalty. There are a few exceptions, but since tax law is a moving target, you should consult your accountant or the IRS before making any decisions.

Age 62 is the next big trigger. According to the Social Security Administration, if you were born between 1943 and 1954, you are entitled to Social Security benefits as of age 62. Your benefit amount varies depending on your work history; however, if you decide to draw Social Security benefits at this age, you will receive only 75 percent of the monthly benefit to which you are entitled.

Age 65 is important because, as mentioned previously, you can be covered by Medicare at this age. Medicare can be overwhelming -- it has several "parts," and it is not entirely free. Apply several months before your 65th birthday. Get complete information at https://www.medicare.gov/ . Medicare is unrelated to Social Security benefits; in other words, you can be covered by Medicare at age 65 whether or not you have applied for Social Security benefits. At this age, if you were born between 1943 and 1954, you would receive about 93 percent of your monthly Social Security benefit.

Age 66 is the "full retirement age" if you were born between 1943 and 1954. (Full retirement age varies for individuals born after 1954; visit the Social Security Administration website -- https://www.ssa.gov/ -- to learn more.) This is the age at which you can collect 100 percent of your monthly Social Security benefit.

Age 70 is a milestone for many Boomers, and it also is an important trigger. Under current Social Security Administration regulations, this is the magic age at which everyone, regardless of when you were born, gets the maximum "delayed retirement credit" if you have not yet taken Social Security benefits. As an example, if you were born in 1943 or later and you wait until age 70 to collect your Social Security monthly payment, the twelve-month increase to your monthly benefit is 8 percent. That's significant, especially if you live a lot longer! After age 70 there is no increase in your monthly benefit other than COLA, or Cost Of Living Adjustments, if these are enacted by law.

Age 70-1/2 is a trigger but a new law called "SECURE" enacted at the end of last year changed its importance. This age used to mark the end of when you could contribute to traditional IRAs and the beginning of when you had to start taking an "RMD" (Required Minimum Distribution) from an IRA or 401(k) retirement plan to avoid tax penalties. With this new law, you can now continue to make contributions to traditional IRAs even past age 70-1/2 (you could already do so with Roth IRAs and the law doesn't change that). In addition, under the new law, you do NOT have to take an RMD until age 72, as long as turn 70-1/2 in 2020 or later.

Age 72 is a new trigger date, as indicated above. This is the date all those who reach 70-1/2 in 2020 or later must begin taking RMDs from retirement plans to avoid tax penalties. You should consult an accountant and financial planner to fully understand the RMD calculations and tax implications.

These are the primary trigger ages for a general retirement timeline, but you should add any other ages that are important to you personally. I hope you found this helpful -- and not too confusing!

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Are These Your Main Retirement Worries?

Books Man-2546100_1920Retirement is a stage of life that Boomers may anticipate with joy and relief, but it can also be a time of worry and anxiety. In a podcast for Knowledge@Wharton, Wade Pfau, author of the book Safety-First Retirement Planning, says many of those planning for retirement have three main worries:

  1. Longevity risk - "The longer you live, the more your retirement costs. You have to plan for that."
  2. Market volatility - "When you're living on distributions from your assets, market volatility gets amplified and has a bigger impact."
  3. Spending shocks - "Those are the potentially large expenses that may or may not happen. If they do happen... they require additional assets to cover that type of uncertainty."

Obviously, all three of these worries relate directly to the financial side of retirement. Boomers who contemplate retirement also need to consider other aspects of retirement such as personal fulfillment, health and social engagement. Still, for most of us, the ability to afford a comfortable retirement is crucial.

In his book, Pfau offers eight guidelines for what he calls a "safe retirement." First and foremost, he says, is to build a retirement plan around the notion of how long the money should last. "You have to anticipate the possibility of living to an advanced age," says Pfau. "You have to strategize about being able to fund a more costly retirement because you’re living longer." He adds that it is also important "to be efficient in terms of not wasting resources."

Safety and security in retirement involves managing what Pfau calls the "four Ls" -- Lifestyle, Longevity, Legacy and Liquidity. He says, "The lifestyle and longevity are your retirement budget. Legacy is your legacy goal. The most important advice would be to think about liquidity. Liquidity is the idea that you have money to cover unexpected expenses."

You may want to factor Wade Pfau's perspective on a safe retirement into your own retirement planning. Learn more about his book or purchase it below:

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Still Working Full Time? Get Ready to Be Fired

OntheClock Keyboard-155722_1920In modern-day America, nothing seems to be as tenuous as a Boomer's full-time job. The federal ADEA (Age Discrimination in Employment Act), intended to protect Boomers from employment-related age discrimination, has been found to be largely unenforceable when it comes to layoffs or firings, even if they appear to be motivated by the employee's age. Consider it one more empty government "guarantee" to protect citizens.

Writing for Knowledge@Wharton, Jeff Pundyk, former publisher of The McKinsey Quarterly, claims: "Mid- and late-career management is being hollowed out by consolidation, technology, the gig economy and globalization, leaving experienced workers unprepared to navigate the new world of work. ...Too often when experienced workers who have developed the skills to rise within an organization find themselves displaced or stuck among a shrinking cohort, their skills, expectations, and experience fail them. And the older they are, the greater the risk — and the tougher it can be to find something new."

Unfortunately, this may sound like very familiar territory to accomplished employed Boomers, who are the most vulnerable to the whims of corporate management when it comes time to jettison highly compensated employees. Pundyk writes "Those who can adapt will both shore up their value within their organization and be better prepared should they find themselves on the outs." He offers some excellent advice for Boomers in his article:

  1. Adopt an "untitled mindset."
  2. Develop a portfolio of projects.
  3. Save for the worst case.
  4. Embrace ambiguity.
  5. Always be learning.
  6. Know your story, and
  7. Tell it.

Read Pundyk's insightful article for further details on each of these strategies.

Pundyk's conclusion: "Having a job no longer solves for stability. It can provide some sense of security for as long as it lasts, but don’t mistake short-term security for long-term stability. With the right mindset, however, stability can come from you, not from your employer."

Excellent observations worth pondering.

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Two New Boomer Books to Start the New Year Right

BooksHappy new year... happy new books! Here are two new books, just in time for the start of 2020, that are written especially for Boomers.

Boomer Brand Winners & Losers

This remarkable book features fascinating stories of 156 best and worst brands of the Boomer era. Relive the days of Cap’n Crunch and Cocoa Puffs, E-Z Pop and Pop-Tarts, cap guns and comic books. Recall the time when automobiles ruled the road and a transistor radio was “advanced technology.” Learn how television played a key role in brand advertising. Discover which brands blossomed and which were a bust. This book is a real "blast from the past" that Boomers will love!

Read a free chapter excerpt here.

Ten Secrets to Losing Weight After 50

Are you over the age of 50 and struggling to lose weight? Have you tried countless diets to no avail? Do diet methods you used in the past no longer work? It’s not your imagination. As you age, you tend to gain weight and it’s harder to lose than when you were younger. Through extensive research and trial and error, author Julie Gorges finally unlocked the secret of losing weight after the mid-century mark. After explaining why it’s so hard to lose weight after 50, she shares 10 things she was doing wrong and what she changed to finally succeed.

Read a free chapter excerpt here.

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Retirement Your Way

Books Man-4060500_1920Everything I read suggests the Boomer generation has been the first to truly change the notion of retirement. I've witnessed this personally -- - every Boomer I know (including myself) views retirement as an opportunity to reinvent, rewire, or refresh their lives.

The biggest question Boomers face is not whether to continue to be vital and active, but rather what to do next. There are many books available that can help point you in the right direction, including John D. Anderson's Replace Retirement. Writing for NextAvenue.org, Anderson  says "Your second half of life can be invigorated and energized by living out one or more of three opportunities. You can do all three at once, but will benefit most by focusing your energy on one, and enjoying the other two as additional fuel." He identifies these three key "drivers" to success in the second half of life:

  1. Pursue Professional Mastery
  2. Revive a Dream
  3. Improve Your Word

Check out what Anderson has to say about each of these drivers in his article.

I think Anderson has accurately identified the areas that are likely to be of greatest importance to most Boomers as they consider what to do next. There is much to be said for maintaining flexibility and, if finances and time permit, pursuing more than one avenue in life's second half. Anderson's suggestion that Boomers concentrate on one area but include the others as secondary interests makes sense for those who want to enrich their lives. This concept has worked well for me: I maintain a part-time professional career, but also pursue personal passions and volunteer activities.

If you can make it work, retirement your way -- the way you want to structure it -- should be the best way to live out the rest of your years.

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How Not to Become a Statistic

Musings Warning-sign-30915_1280As Boomers age, they become less employable (not their fault) and more financially vulnerable (sometimes their fault). The concerning thing is the statistical evidence that these two factors converge to create a crisis for a good number of retiring Boomers.

Here are some sobering statistics that raise red flags, as reported by NextAvenue.org:

  • 36 percent of workers and current retirees have $1,000 or less in savings.
  • 47 percent of current retirees were forced into early retirement. 55 percent of them had to leave work because of health problems or disabilities. Only 20 percent were forced into retirement due to changes at their companies.
  • The number of workers older than 55 will grow to 25 percent of the workforce by 2022. However, many of the lower paying service sector jobs, such as grocery clerks, waiters/waitresses and substitute teachers, will be held by the post-retirement age worker instead of younger workers.
  • An incredible 80 percent of American workers cannot afford to retire at all.

A legitimate question is: How do you avoid becoming a statistic?

There are several things to monitor as you age, including your health, your financial situation, your living situation, and your life responsibilities (such as potentially caring for your elderly parents or financially assisting your adult children). Caring for yourself comes first -- and that means checking your own health statistics periodically (weight, blood pressure, etc.), and being vigilant about diet and exercise. On the financial side, you should be living within your means and working with a financial advisor to ensure you are following the best strategy when it comes to investing, saving and drawing upon retirement assets. The last thing you want to do is outlive your money.

Statistics regarding retirement in America are indeed concerning. You need to pursue a smart course of action so you do not  become a statistic.

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Working "On the Side"

OntheClock Piggy-bank-2889046_1920For those retiring Boomers who can put together a number of sources of income to pay the bills, working "on the side" may be an attractive option. It offers flexibility to do other things in retirement.

This creative way of thinking about part-time employment focuses on generating what I call "gravy income" -- income that is not absolutely essential but subsidizes other income. It's even better if working on the side offers the opportunity to pursue gigs, freelancing or contract work (whatever you want to call it) using skills from your past full-time working life. This can be both gratifying and stimulating. 

If that sounds like something for you, take a look at "The Retiree's Guide to Starting a Side Hustle," published by The Balance. Writer Sarah Szczypinski first discusses the steps to "side hustling," including how to coordinate it with Social Security, create an online presence and use your skills. She then provides descriptions of and links to various professional websites that act as entry points to potential work, some of which can be done entirely online. Opportunities include paid mentoring, consulting and all types of contract work. An additional consideration, she says, is to rent out a room or a second home with a service such as Airbnb which can substantially bolster a retiree's income.

Szczypinski writes, "The gig economy isn’t going away, and there’s a sea of opportunity (and income!) available for those who search. Take advantage of flexibility in retirement and dive in. A side hustle can lessen the financial burdens of aging."

Working only when you want on a flexible schedule and generating gravy income sounds like a pretty good post-full-time employment life, doesn't it?

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"Modern Elder": A New Way to Think About Aging

OnaWhim Screen Shot 2019-11-05 at 11.57.02 AMChip Conley came up with the term "modern elder" when he became known as the "elder" at a company where virtually all of the other employees were half his age. Conley has grown that simple phrase into a movement; he started the "Modern Elder Academy" in Mexico (a resort for midlife reflection) and wrote a book titled, Wisdom@Work: The Making of a Modern Elder. He also recently started distributing "a daily reminder of wisdom and its value" via Wisdom Well.

In an interview with Richard Eisenberg for NextAvenue.org, Conley says about his movement:

     "It’s pro-aging and speaks to the idea that maybe elders will make a comeback, but in a new form. It’s about creating a world with intergenerational collaboration, where older people in the workforce can be partners with younger people and both have something to bring to the table.

     "A growing number of people are using the term ‘middlescence.’ It generally happens in your fifties. It’s a time when you move from accumulating to editing. Less ego, more soul. Less interesting, more interested. Less achieving and attaining, more creating a legacy and attuning.

     "It’s what the Modern Elder Academy has been doing in many ways. It’s so clear there’s a need for this. There’s such a gap between the societal and personal narrative of aging."

I don't know if "modern elder" is the right phrase, but I consider the "mission statement" behind it as a new way to think about aging. I really like what Conley has to say in the above quote. He speaks eloquently about the need to break down ageism barriers in the workplace ("creating a world with intergenerational collaboration"). He also does a fine job of defining some of the primary aspirations of a maturing, well-grounded Boomer: "...move from accumulating to editing. ...more soul. ...more creating a legacy and attuning."

It is obvious to me why Conley was selected as a "2019 Influencer in Aging" by NextAvenue. It this kind of inspired, expansive thinking about aging that we need more of in our society.

Image: Chip Conley, Modern Elder Academy

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OK Boomers, What Do You Think of "OK Boomer"?

Musings Screen Shot 2019-11-08 at 11.56.09 AMAmong the popular movement-based phrases are "Black Lives Matter" and "#MeToo." Another one of late representing a different kind of "movement" is the phrase, "OK Boomer." As The New York Times reports:

“Ok boomer” has become Generation Z’s endlessly repeated retort to the problem of older people who just don’t get it, a rallying cry for millions of fed up kids. Teenagers use it to reply to cringey YouTube videos, Donald Trump tweets, and basically any person over 30 who says something condescending about young people — and the issues that matter to them.

OK, I get at least one of the motivations behind "OK Boomer." In the context of climate change, war, government corruption, inequality or any number of other burning issues, it seems legitimate for younger generations to scold Boomers for, well, mucking up the world we live in. It is difficult for the Boomer generation to deny its responsibility for some if not many of the world's ills. Furthermore, the notion of a younger generation ridiculing or disrespecting an older generation is something which has a certain familiarity, doesn't it? Isn't that the way we felt about our own parents as we were growing up, steeped in rebellion and protest? Now, it seems, we're getting some of the same treatment we dished out to elders during our youth.

On the other hand, when used in a pejorative sense to simply trash Boomers because they are older, "OK Boomer" may seem like a phrase that is dismissive, rude and age-bashing. It is particularly hurtful when a wildly popular sweatshirt adds something else to this phrase, as depicted in the article in The New York Times: "OK BOOMER Have a Terrible Day." So, it appears some who use the phrase in this way may deeply distrust and even dislike Boomers. Sadly, it is also indicative of the tribal warfare that has become normalized in our dealings with one another. This is a time in our history when groups of people are poised to reject others, simply because they're different, are of different generations or have different beliefs.

I'm not any more a fan of "OK Boomer" than I am of "Go back where you came from." What are your thoughts about "OK Boomer"?

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Retiring Begins by Answering the Right Questions

OnYourOwn Man-1348082_1920It goes without saying that retirement is a significant life change. Equally obvious is the fact that many Boomers deny the reality of retirement, working as long as they are able. But at some point, most of us realize that maintaining the same pace is an impossibility and, at the very least, we accept the need to transition to something different. That something may not look like traditional retirement at all, but chances are it doesn't look like our previous career-focused lifestyle either.

There are so many questions surrounding retirement -- the next phase, reinvention, second act, or however you define it -- that it can be bewildering just to know the right questions to ask. Writing for The Balance, senior financial planner Scott Spann seems to have identified five of the most important questions to answer:

  1. What do you look forward to doing the most in retirement?
  2. How long do you need your money to last?
  3. How much retirement savings will you actually need?
  4. How much should you be saving today?
  5. How much can you afford to spend yearly once retired?

As you can see, the first question is really qualitative while the next four are quantitative. Spann offers some wise commentary about how to answer each of these questions, so the article is worth reading here: https://www.thebalance.com/five-important-retirement-questions-you-need-to-answer-4025465?

None of the questions are necessarily easy to answer; in fact, all of them probably require a great deal of thought, some serious self-reflection, conversations with your significant other, and counsel with a financial adviser. But contemplating retirement without adequately answering these questions is fraught with risk. If you've had a successful life, you know by now that planning ahead is an essential part of building a secure future. It should be no different with retirement: First ask the right questions -- and then be sure you answer them to the best of your ability.

HappilyRewired.com is a Top 75 Baby Boomer Blog.

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