BOSTON (CBS) – If you are a Boomer your retirement planning has been scrutinized in the media for the last several years.
The world knows you have not saved enough. And they are waiting to see what you are going to do about it.
When you reach that birthday with a big five and a zero everyone thinks you are over the hill. But it is better to be over the hill than under the hill!
At 50 you start day dreaming about quitting work and spending your days traveling and playing. “Take this job and shove it” has a nice ring to it.
But what if you have not saved very much and you want to retire in 17 years at the new magical Social Security retirement age of 67. You are not alone, for most studies have shown that Boomers in their 50s have not saved enough.
They are on track to replace about 60% of their income in retirement, saving on average $2,750 annually. That’s not going to be enough. So why aren’t they saving more?
Many financial experts believe the Boomers have the mindset that they will inherit money from mom and dad so they don’t need to worry about retirement planning. But what I am seeing is that mom and dad are living longer and they are consuming the dollars the kids thought they were going to inherit.
So as a Boomer you really do need a backup plan. That means saving more and it’s never too late to start saving for retirement, which has been my mantra all week.
How do you reach a million bucks if you are fifty and have not saved very much? I can give you the numbers, but they are scary. You will need to save $29,000 a year and get an 8% return over the next 17 years. Can it be done? Maybe, but it means saving almost a half a million, $476,000.
Being of a more practical nature I would lower the bar here. Save as much as you can over the next 17 years. Anything you tuck away now will make for a more comfortable retirement. Use your retirement plan at work to start. For example, if you can save $10,000 a year, again not an easy thing to do, and assuming an 8% return you could have $365,000 in the retirement nest egg at 67.
Consider working past age 67 or having a part time job in retirement. Look to pay off your mortgage during this decade so you can retire debt free and then use those extra dollars for additional retirement savings. Also consider downsizing your home if the kids are gone. If you make a profit on the sale put that into savings. And any additional dollars you save can also be put away for retirement.