Baby boomers not in hurry to leave workforce; financial planners say they're worried about having enough for retirement

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One of the major challenges of business and industry today is the replacement of baby boomers, workers born between 1946 and 1964.

And, while employers are trying to figure out how to deal with the loss of decades of experience, some boomers are trying to figure out how they are going to handle not getting that regular paycheck.

“They’re kind of looking a little panicky because they don’t feel like they have prepared enough,” said Ron Harbison of Peachtree Planning on Second Avenue. “They’ve got more debt than they thought they would have. They may be part of that sandwich generation that is taking care of parents and may be having to take care of kids and grandkids.”

The debt issue is something that is historically unique to the baby boom generation. A report from the Federal Reserve Bank of New York indicated that total American consumer debt topped $3.2 trillion last summer. Credit card balances exceeded $880 billion at the end of July 2014.

Don Ash, Estate Planners of Georgia, said another issue he is seeing for a lot of boomers involves the fear of outliving their retirement savings.

“I’ve been in this business 30 years and I’ve seen a big transition there. It used to be that mom and pop were worried about how much money they were going to leave their children. Now it’s more like, how much money am I going to need to retire?” Ash said.

Retirement plans are also changing. Regular pension plans have given way to matching 401(k)s and even that process is proving less lucrative for many soon-to-be retirees, many who have delayed retirement.

“Companies are not matching as much as they used to,” Ash said. “Some corporations are not getting into retirement packages like they used to, to hold down their own cost of doing business. Baby boomers need to start planning on their own.”

Improvements in medicine through the decades also have contributed to the dilemma retirees are facing.

The cost of prescription medicines, co-pays for hospital visits and routine cost of living issues — housing and food — can often outpace what a retiree will earn from Social Security or a modest pension.

“Welcome to Parkinson’s Laws, specifically the third one that states expenses always rise to meet available income, and then some,” writes financial planner Jim Blankenship for the Advice IQ website. “As the law says, “It’s always possible to live outside your means.”

The question retirees need to ask is what percentage of their former income will they be able to live on. The answers are as different as there are retirees.

Some people will want to travel and see the world. Others may favor a simpler lifestyle, while others will want to sock away money for their children or grandchildren.

Nancy Schlossberg, a professor emerita at the University of Maryland, told Senior Living magazine that going into retirement is a lot like graduating from college. Some people know exactly what they want to do, while others drift for years. Schlossberg also said the psychological impact of retirement could be just as taxing as the financial issues that retirees face.

Another factor that separates many baby boomers from other demographic groups in the workforce is a generally strong work ethic. Aside from the financial need for many of them to remain in the workforce, others have a desire to remain active.

Click here for a link to the Georgia Department of Labor’s Labor Market Explorer.

Source: Rome News

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