Late-Boomers and Generation X Facing Several Retirement Concerns

Retirement planning should be a high priority if you are a Late-Boomer or a GenXer. Late-Boomers are typically individuals born between the mid-1950s and 1964. Generation X is generally considered to be those born between 1965 and 1980.

In 2023, there is an estimated 61 million Generation Xers and 46 million Late-Boomers living in the U.S., and if you are someone in is group, you are aware that you're getting older and retirement is getting closer.

This group is at a critical point in their lives where they need to start making final decisions that will affect their financial security and their families in the future. As people age, their ability to save and invest for retirement decreases, so it is essential to start planning early. 

Late-Boomers and GenXers have the benefit of having access to more sophisticated investment options than previous generations, but the number of years they have to prepare is getting shorter. Longevity is a big concern, and the risk of running out of money as they plan to maintain a lifestyle when they retire that they are accustomed to during their working years.

Retirement planning is a complex process, and one of the most important considerations is longevity. According to a study by the Society of Actuaries, women still live longer than men.

The average 65-year-old man can expect to live to age 84, while the average 65-year-old woman can expect to live to age 86.

This means that retirees must plan for a retirement that could last 20 years or more. As such, it is essential for retirees to have a retirement plan that will provide them with enough income and resources to last throughout their lifetime.

You Need More Money and Protect the Money You Have Now

Late-Boomers and Generation will need more money saved for retirement and consider the impact of longevity and long-term health care as part of the retirement equation. Proper planning can help ensure that these groups will have enough money saved for retirement when they reach their golden years.

The so-called "golden-years" are golden for the wrong reasons. Inflation, economic uncertainty, and rising long-term health care costs can derail the best plans unless the plan considers these variables.

According to financial expert Suze Orman, unexpected expenses can derail your retirement.

Retirement is not the golden years. It's the platinum years, and you have to be prepared for them. You have to save more than you ever thought you would need because there are so many unexpected expenses that can derail your retirement.

Saving for retirement and being prepared for unexpected expenses that may arise during retirement is essential when preparing for retirement. If you make mistakes now, they will be difficult to correct when you are older.

We become closer to retirement every year we get older and need to start thinking about how we will support ourselves during this time. Do you have a plan, and are you executing the plan? Should you make adjustments to compensate for the variables that will impact your finances in the decades ahead?

Retirement often coincides with a decrease in income, so it is crucial to start saving early and saving more. Too many people avoid fully funding their employer's 401(k) or other investment options. If your employer matches contributions, you should take advantage of that benefit. Even if they don't match, the tax-deferred growth is valuable as you prepare for retirement.

The correct retirement planning can help to ensure that you have enough money to last throughout your retirement years.

Avoid Running Out of Money When You Retire

If you don't have a retirement plan, you better create one right now that includes both short-term and long-term goals. This plan should include an estimate of how much money will be needed in retirement and a timeline for when the money will be required. 

When determining how much money you will need when you retire, it is important to consider your lifestyle and financial goals. You should consider factors such as your expected retirement age, desired retirement income, estimated Social Security benefits, and any other sources of income. 

Additionally, you should factor in the cost of living in the area where you plan to retire and any medical expenses or long-term care costs that may arise. Once you reach age 65, Medicare will become your primary health insurance. You will have a Medicare supplement (or Medicare Advantage), and the costs of supplements and the Part D drug plan should be more costly by the time to get to age 65.

The financial consequences of health care and long-term care when you are older can be daunting. According to the U.S. Department of Health and Human Services, the average 65-year-old couple who retired in 2020 will need $295,000 to cover medical expenses throughout retirement. 

This figure does not include long-term health care costs, which can add up quickly and vary greatly depending on the type and length of care needed. Long-term health care costs are exploding, which will continue to rise due to increasing demand for services, greater longevity, inflation, and higher labor costs.

Without a plan, long-term care costs will reduce your income, drain assets, change your lifestyle, and affect your legacy. Plus, there are family concerns with long-term care that should be considered. Adult children or an older spouse will not be a solution for caregiving over a long period of time. Professional care, either for in-home care or a facility like assisted living, will need to go into place to provide quality care. 

You can find the current and future cost of long-term health care where you live with the LTC NEWS Cost of Care Calculator.

LTC NEWS Cost of Care Calculator - Find Costs Where You Live

For example, the national cost of two years of in-home care is expected to run over $200,000, over $8600 a month. A few years of assisted living costs can add more than $200,000 to that bill.

The cost will vary depending on where you live when you need care, and the type of care you will require. However, it will adversely impact your family and finances without a plan.

Long-Term Care Insurance should be considered as part of your retirement plan.

How Does Long-Term Care Insurance Differ from Other Types of Insurance?

If you purchase Long-Term Care Insurance in your 40s or 50s and enjoy good health, premiums can be very affordable for many people., Those in fairly good help can still find affordable coverage even through their mid-60s. Those who are older may find it challenging both from a cost standpoint and from an underwriting standpoint, but a specialist may be able to find a plan that matches your age, health, and family history.

How Much Does Long-Term Care Insurance Cost?

Your health is the top consideration in shopping for Long-Term Care Insurance. Every insurance company that its own underwriting criteria, and the older you are when you try to get coverage, the more difficult it will be to find it. 

What is Underwriting? How Does Current Health Impact Someone's Ability to Obtain Long-Term Care Insurance?

Inflation and Retirement Planning

It is also important to consider inflation and how it may affect your retirement savings over time. Inflation has a significant impact on retirement planning for Late-Boomers, and Generation X. Inflation erodes the purchasing power of money, meaning that the same amount of money will buy fewer goods and services over time. This means that you need to save more money in order to maintain your desired standard of living in retirement. 

Additionally, inflation can reduce the value of fixed-income investments such as bonds, which are often used to supplement retirement income. To combat this, individuals should consider investing in stocks and other assets that have the potential to increase in value over time. Additionally, you should consider increasing your contributions to retirement accounts such as 401(k)s or IRAs to ensure you have enough money saved for retirement.

No question inflation is a major factor that will influence retirement in the next 20 years. A report by the Center for Retirement Research at Boston College says this ...

Inflation erodes the purchasing power of retirement income, making it harder to maintain a given standard of living.

This means that retirees will need to save more money in order to maintain their desired lifestyle in retirement. Additionally, inflation can also reduce the value of Social Security benefits over time, as they are not adjusted for inflation. Therefore, it is important to plan ahead and save enough money to account for potential inflationary pressures in the future.

Diversification

Be sure to have a diversified portfolio of investments in your retirement plans. This should include a mix of stocks, bonds, mutual funds, and other investments, such as real estate. Stocks provide the potential for long-term growth, while bonds provide stability and income. Mutual funds offer a way to diversify across different asset classes and can be tailored to an individual's risk tolerance. 

Real estate can also be a great way to diversify and generate income in retirement. It is important to consider the time horizon for each investment and adjust the portfolio accordingly. For example, if retirement is still several years away, it may be wise to invest more heavily in stocks with the potential for higher returns over the long term.

It is generally recommended that you become more conservative with your retirement accounts as you approach retirement age. This means shifting your investments from higher-risk, higher-return investments to lower-risk, lower-return investments. Generally, this shift should begin in your 50s and be completed by the time you reach retirement age.

Always stay informed about changes in the economy and financial markets that could affect your retirement savings. Staying informed can help you make adjustments to your plans, if necessary, in order to ensure you have enough money when you retire.

Manage Debt and Estimate Future Expenses

Be sure to manage debt responsibly. Paying off high-interest debt, such as credit cards, can help free up more money for retirement savings. 

When estimating expenses for retirement, it is important to consider both fixed and variable costs. Fixed costs are those that are expected to remain the same each month, such as rent or mortgage payments, insurance premiums, and taxes. 

Variable costs are those that can fluctuate from month to month, such as groceries, entertainment, and travel. It is also important to consider inflation when estimating retirement expenses. Inflation is the rate at which prices for goods and services increase over time. As inflation rises, so do the prices of goods and services. Therefore, it is important to factor in an estimated rate of inflation when calculating retirement expenses. 

Finally, it is important to consider any additional sources of income that may be available during retirement. This could include Social Security benefits, pension payments, or income from investments or rental properties. Taking into account all of these factors will help you create a realistic estimate of your retirement expenses.

By Age 60

By age 60, it is important to have a retirement plan in place that will provide financial security for the future. It would be much more difficult if you have delayed retirement planning until this stage of life. It can be done, depending on your income, but it would be more challenging.

By age 60, you should have a diversified portfolio of investments, such as stocks, bonds, mutual funds, and real estate. It is also important to have an emergency fund set aside for unexpected expenses. 

For example, let's say you will retire at age 67 and want to have $60,000 a year on top of your social security; what would you need in place? 

Assuming a 4% withdrawal rate, you would need to have saved $1,500,000 by age 67. This means that you would need to save an average of $25,000 per year for the 30 years leading up to retirement in order to reach this goal. 

Being Prepared for Long-Term Health Care

Remember, long-term care costs will impact your income and will drain some savings unless you have Long-Term Care Insurance in place. By age 60, ideally, you should already have an LTC Insurance policy in place.

There are several types of policies in place with different price points. A specialist will discuss these options, provide accurate quotes, and make appropriate recommendations.

Generally, you can choose a traditional policy or a hybrid policy. Traditional plans make up what most consumers purchase, and they include partnership-certified policies that provide dollar-for-dollar asset protection.

Hybrid policies combine life insurance or an annuity with a qualified rider for long-term care. While more expensive, if you want to make sure you get money from the policy one way or the other, this could be something to consider.

If you have assets under two million dollars, a partnership policy may be more appropriate. However, be sure to discuss these options with a Long-Term Care Insurance specialist who works with all types of plans and has extensive experience in this area.

Find an LTC Insurance Specialist

Avoid the Stress

Retirement planning can be a source of great stress for your family. Many people worry about not having enough money to support themselves and their loved ones in their later years. However, proper retirement planning can help to ease this stress significantly. 

With the right plan in place, you will feel secure knowing you have taken the necessary steps to ensure your financial future. This peace of mind can bring a sense of relief and joy, allowing you and your spouse to enjoy your retirement years without worrying about money. 

Suze Orman says retirement planning can be a great way to reduce stress and anxiety. 

Retirement planning is not just about money; it's about peace of mind. When you have a plan in place, you can relax knowing that you're taking the steps necessary to ensure your financial security in retirement.

Planning for retirement can help alleviate the stress and anxiety associated with worrying about how you will support yourself in your later years. Taking the time to create a retirement plan that works for you can give you the peace of mind that comes with knowing that your future is secure.

Long-term health care also adds worry and anxiety. Quality care costs money, and those costs impact your savings and your family. 

Proper retirement planning will help you avoid the anxiety and fear that comes with not having enough money for retirement. With a plan in place, you can rest assured that you will have the resources you need to live comfortably in your later years and access to quality care without placing a burden on those you love.