02/29/16

3 Key Moves for Boomers Facing Longer Lives

CBS Moneywatch.com, Steve Vernon, February 9, 2016

Most of us know about the general trend: Americans are reaching retirement age at an unprecedented rate. But what does that really look like, and what are the implications? A new report from the Urban Institute titled “How Retirement is Changing in America,” provides some useful insights, and it offers three steps boomers can take to help them live long and live well.

First, let’s look at the basic stats: Forty-eight million Americans were age 65 or older in 2015, and the Urban Institute projects that number will increase to 74 million in just 14 years, by 2030. That’s an increase of more than 50 percent.

The 65-plus population — mostly retired — is growing faster than the adult population under age 65, most of whom are working. In 2010, there were four Americans of working age (25 to 64) for every person of retirement age (65 and over). By 2060, that will drop to a little more than two to one.

As a result, each worker will have to pay a larger share of their income to support retirees through Social Security, Medicare, Medicaid and other public services. While this might sound alarming, it’s the inevitable result of two positive trends: Americans are living longer and having fewer children.

Here are the three life-improving steps for boomers:

Work longer

One way to reduce the burden of retirees on working-age adults is to have more people work longer and retire later. Working longer increases Social Security benefits, allows more time to save for retirement and reduces the time spent in retirement, so retirement resources don’t need to last as long.

If you decide to work longer, it looks like you’ll have plenty of company. Between 1994 and 2014, the percentage of men age 62 to 64 who worked increased from 45 percent to 56 percent. For those age 65 to 69, the share increased from 27 percent to 36 percent. Similar increases occurred in the percentage of women working at both age levels.

But just deciding to work longer isn’t sufficient — most likely you’ll need to do some planning to make it happen.

Take care of your health

Another factor that’s helping reduce the burden of retirees on working-age adults is that, compared to prior generations, older Americans are improving their health. Between 1998 and 2012, the percentage of Americans age 80 and older in fair or poor health — the lowest ranking in the study — fell from 43 percent to 34 percent. Better health allows people to work longer and reduces spending on medical costs.

However, recent health declines among middle-aged adults may reverse this trend and could cause an increase in the future health-cost burden. Between 1992 and 2010, the percentage of adults age 51 to 54 who reported they were in fair or poor health increased from 17 to 22 percent. One reason is the increase in the prevalence of diabetes.

With this in mind, people approaching their retirement years would do well to join the millions of Americans who are exercising more and reducing their intake of sugar and improving other poor nutritional habits.

Nurture your social portfolio

Perhaps the most startling finding in the Urban Institute report is that more older people are projected to be living alone in their retirement years, a problem that’s particularly acute for women. In the next 50 years, about half of all women 65 and older will spend 10 or more years without a spouse, and about one-third of older men will do the same. One out of five older women won’t have any children to take care of them.

These projections point to the importance of actively nurturing social connections as a critical part of your retirement planning. Social connections can make your life more interesting and satisfying, and improve your health in the process.

Social connections help provide emotional support and assistance from people who can pitch in when you really need help. Working, volunteering, bringing together family and friends, pursuing interests and causes, actively participating in social media — these are all positive ways to build your social portfolio. You might also explore alternative living arrangements that enable close proximity to people who care about you.

While the challenges of an aging population may seem daunting, they result from the longevity revolution that’s allowing much longer lives. Boomers are the first generation that must rise to the occasion of dealing with longer lives for their parents and themselves. It’s a good challenge to take on.

To Your Successful Retirement!

Michael Ginsberg, JD, CFP® 

02/22/16

How to Tell If You’re Ready to Retire

US News & World Report, By Tom Sightings Feb. 9, 2016

Money isn’t the only thing you need for a successful retirement. Retirees need to find new activities to fill their days.

I retired when I was in my mid-50s, the day my boss walked into my office, handed over the dreaded manila envelope and told me to clear out my work space by the end of the week. Fortunately, I knew it was coming because it was no secret that my company was facing hard times, and so I had time to prepare.

But suppose you’re lucky enough to choose the timing of your own retirement. How do you know you’re ready and that it’s finally time to take the leap? You’re probably thinking in terms of money. Can you afford to retire? Of course that’s important, but it’s not the only issue. Here are five questions to answer before you enter retirement.

1. Do you have something else to do? The biggest difference between working and being retired is that you no longer get up, get dressed and go to work five days a week. Now you have to fill your own time and structure your own day. That’s easy if you have a passion outside of work – whether it’s playing in a band, writing your memoirs or roaming the golf course. If you don’t have an inborn passion, then you need to recognize that retirement is a new stage of life, and you probably want something to do, especially if you’re retiring early. Some people take on a part-time job, while others volunteer in the community. Ask yourself what you really like to do, what engages your interest, and realize that finally here’s your chance to do it, no questions asked.

2. Are you ready to pass up more money for more freedom? In all likelihood, you will have less income after retirement. So you know you’re ready to retire when you reach the stage in life when you’re happy to live on less in order to live where you want and the way you want. Experts say you need 80 percent of your working income to retire comfortably. But many people retire on less, because their desire for free time outweighs their need for more material goods or their impulse to keep up with the Joneses. They just want enough time to enjoy retirement, and they’re willing to adapt their lifestyle to the resources they already have.

3. Do you want to spend more time with your family? It’s almost a cliché, but for many people it’s true, especially when it comes to grandchildren. According to a study from Fidelity Investments and the Stanford Center on Longevity, over 60 percent of retirees cite spending time with grandchildren as a major reason for retiring. But be careful. According to that same study, spouses often have different views about spending time together. Some 60 percent of husbands say they want to spend more time with their wives, while barely 40 percent of women want to spend more time with their husbands.

4. How is your health? Health issues are very personal. Some people with a chronic disease, or a family history of heart disease, may want to take early retirement to enjoy life while they can. Others may have to hold onto a job to keep their health insurance. Regardless, you should understand Medicare and have your retirement medical insurance in place before you leave any employer sponsored plan. But if you suffer from a lot of stress at work, then retiring may actually improve your health. In fact, almost two thirds of retirees cite stress as a significant motivating factor in deciding when to retire. Retirement may also give you the extra free time to do more exercise and prepare healthier meals.

5. Can you afford to retire? Finances are not the only reason to retire, but they are important. Make an estimate of what your new lifestyle is going to cost. Include extra expenses for travel and health care. But also consider that you no longer need to save part of your income or support your children, and you can make adjustments to your living arrangement, including possibly moving to a lower cost area of the country. Then count up your resources from Social Security, a pension, an IRA or 401(k) plan and wherever else, and try to make them match up. You can’t possibly account for every penny – there are too many unknowns – but you should have some degree of confidence that you can pay your way through this new adventure called retirement.

To Your Successful Retirement!

Michael Ginsberg, JD, CFP®