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Getting Serious About Money Before You Retire

Musings Piggy-bank-2889046_1920There is a significant financial risk associated with retirement, and in general, Boomers are not planning for it. Studies continue to show that too many Boomers have under-funded their retirement by not saving enough -- one of the major reasons they say they must continue to work well into their 70s and even beyond. While there may be good reasons we Boomers haven't saved enough for retirement, it will catch up with us when we stop working. Social Security benefits simply will not provide enough income to live on.

Renowned financial author Jean Chatzky makes it plain in an article for The Balance that a retiree's income must account for three large unknowns: Longevity, Inflation and Health Care Needs. They each have their good news/bad news components:

  • Longevity: The good news is we are living longer; the bad news is it costs more to live longer.
  • Inflation: The good news is the inflation rate is currently low; the bad news is it could easily spiral and we don't know when.
  • Health Care Needs: The good news is you may be healthy right now; the bad news is health care will cost more as you age, which is when you may need it the most.

In her article, Chatzky outlines a sound strategy for dealing with these three unknowns. Her recommendations include:

  • taking into consideration your unique consumption habits
  • understanding how your spending will change as you age
  • compensating for your changing spending habits by modifying your savings approach
  • making sure you account separately for health care expenses
  • creating a tax strategy, and
  • planning for both emergencies and long-term expenses.

Her article is well worth reading.

All of this may sound bewildering and possibly overwhelming. Let's face it: You may be intelligent, educated and aware -- but having enough money to retire is serious, and it could literally affect the rest of your life. That's why every Boomer would be well advised to come up with a plan (and, in my opinion, work with a Certified Financial Planner) to help figure out the best path to a secure retirement... before it's too late.

HappilyRewired.com is a Top 75 Baby Boomer Blog.

Image: Pixabay.com

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