Boomers contemplating retirement (or some version of it) need to be aware of various trends that might shape their decisions about working, finances, health and even where they live. Catherine Siskos, editor of Kiplinger's Retirement Report, discusses five key trends in a special section inserted into THE WEEK (Sept. 10 - 17, 2021). These trends are part of an article that addresses how this decade is unfolding and includes some forward-looking financial investment possibilities. This special section is well worth reading.
Here are the five trends affecting retirement that Siskos discusses in some detail:
- "Flexible work, at a price." The reality is that older workers may be willing to trade a higher salary for flexible work hours. Working part-time or on a contract basis could be a desirable if less lucrative alternative to permanent, full-time employment.
- "Shrinking benefits." Social Security benefits risk being reduced in the future because of a current projection that the Social Security trust fund will be exhausted in 2034. The age for claiming full retirement benefits continues to go up, with those born 1960 or later affected the most. In addition, claiming Social Security benefits too early results in a permanent cut to your monthly benefit payment.
- "Semi-privatized Medicare." Siskos writes that Medicare "could run short of money as early as 2026." Congress is struggling to come up with a solution.
- "A tech revolution in care." Advances such as smart home technology, remote monitoring, and assists to health care by Artificial Intelligence could help reduce health care costs and increase the efficiency of health care providers and caregivers.
- "Climate disruption." Retirees who are thinking about where to live in their older years need to carefully consider the impact of climate change. For example, the popularity of the South and West as retirement destinations needs to be balanced against the effects of global warming.
It is somewhat disconcerting to realize that we have little direct control over these trends, except perhaps for the first one. However, wise Boomers can assess their own situations and determine how best to deal with each trend. For example:
- With the aid of your financial adviser, you can come up with a plan that reduces expenses and increases income to potentially offset the impact of a cut in Social Security. This might include some combination of part-time work, budget tightening, reviewing your investment strategy and planning to draw down your IRA/retirement savings at the appropriate time.
- With the likelihood that health care costs could play a significant role in your budget, you may need to consider supplemental insurance to Medicare and/or long-term care insurance. You might also consider looking into the cost of assisted living or continuing care retirement communities to determine if they are feasible future options.
- When it comes to "climate disruption," it would be smart to realistically evaluate where you live now and where you may want to live in the future. While climate is just one factor in remaining in your current home or relocating, it is increasingly important.
Now is the time for Boomers to take the necessary steps to protect their retirement/"rewirement" years.