5 Essential Planning Tips for Boomers
If you are a baby boomer, the challenges you face are not insurmountable. There are several steps you can take to improve your retirement and create a more secure future for your family. The recommended steps include:
1. Meet with a financial planner for help with issues such as saving for retirement, choosing the right investments for your age, financing long term care and unforeseen medical expenses, using a college savings plan, reducing debt, and prioritizing your spending.
2. Meet with a tax professional for advice on tax strategies to reduce your income taxes and preserve your estate for your heirs. Get your tax advisor’s input on funding IRAs, 401ks, and annuities. Begin planning a withdrawal strategy with tax efficiency in mind.
3. Meet with an estate planning attorney to discuss your estate planning goals or to learn more about matters such as inheritance taxes, Medicaid planning, marital trusts, special needs trusts, pet trusts, life insurance trusts, living wills, business succession planning or how to avoid probate.
4. Make sure your own retirement is secure before making gifts or loans to children, parents, other family members or friends. No one wants to be a burden on others. The best way to help those you love is to first make sure your own financial foundation is solid.
5. Educate yourself about how much things will cost and the amount of money you will need in retirement. Investigate the housing options that will be available to you as a senior. Visit assisted living and long term care facilities to take tours and gather information on monthly costs. Research in home health care, adult daycare, meals on wheels, and other senior services in your area. Consider whether you need to downsize. Subscribe to periodicals that will provide you the latest information on issues you are likely to face as a senior. By familiarizing yourself with the types of care and services you will need in the future, as well as how much it may cost, you will make better decisions now.
Are You Responsible for Your Parent’s Debts?
One of the biggest challenges for the boomer generation is supporting their aging parents, both emotionally and financially. Due to rising medical costs and longer life spans, many seniors are spending through their life savings and relying on public assistance in the last years of their lives. Consequently, many parents leave behind unpaid medical and nursing home bills and credit card debt. Boomers are often forced to take out loans or use their own savings to pay for their parent’s funeral and burial expenses. If the parent’s estate is insolvent, the creditors will not only go after the surviving spouse, they will begin demanding payment from the adult children. For boomers who are already reeling from putting children through college and their own dwindling retirement accounts, receiving collection notices about a deceased parent’s debts can send them over the edge. However, it is important to understand your legal rights if you are contacted by a creditor about the debts of your parent’s estate. For information, visit our page on Debts of the Deceased.
Staying employed beyond the standard retirement age;
Dealing with the uncertainty of a changing health care system; and
Making an estate plan when long term estate tax rates are unsettled.
These Are Trying Times for Boomers
The baby boomers already had their share of challenges before the stock market crash decimated their retirement accounts and the collapse of the economy caused lots of them to lose their jobs. Many started saving for retirement later than they should have and waded through uncharted territory in trying to choose their own 401K plan investments. The boomers will be the first generation forced to survive in large part on their 401K savings as traditional pension plans are rapidly being eliminated. The dollars they need to put away for retirement are greater than ever before as they face staggering health care costs and the prospect of living longer than previous generations.
As if boomers didn’t already have enough obstacles to a decent retirement, the financial crisis also dramatically reduced the incomes of many seniors. Countless seniors have subsequently been forced to rely on their boomer children for financial help. At the same time, baby boomers are struggling to save college funds as tuition costs skyrocket. Due to the nation’s high unemployment rate, the children of many boomers are unable to find jobs, putting even more financial strain on boomer households as many adult children live with their parents or borrow money their parents really cannot spare.
While scores of boomers already planned to postpone retirement, an ever worsening job market and the American obsession with youth have made staying in the workforce a precarious venture. They are being forced to accept positions well beneath their qualifications and experience, if they are fortunate enough to find employment at all. In the midst of trying to piece together a greatly downsized version of their retirement plans, boomers are now confronted with uncertainties about the health care system. As they try to contemplate estate planning, and consider what type of inheritance they can leave their children, they are certain to need much more money for their own care than previous generations.
With all the challenges boomers face today, many will need a miracle to live comfortably in retirement. But for most boomers, there will be no miracle and they know it. They will instead have to rely upon the creativity and tenacity that has symbolized their generation. Throughout their lives, boomers have demonstrated their ability to redefine themselves and find new ways of doing things. They will undoubtedly reshape retirement and our expectations of it as well.
Long Term Care Insurance for Boomers
Baby boomers are faced with a unique financial challenge. With seniors living longer lives, more of them will require nursing home care, assisted living, in home care, hospice and related types of long term care. In many cases, boomers will be responsible for providing this care for their parents in some manner. At the same time, boomers need to plan financially for their own golden years. As a result, boomers need to educate themselves on long term care options, the costs of each type of care, and various ways to pay for it, including long term care insurance.
