Boomers, Markets & Money

A Down-to-Earth Discussion of Financial and Lifestyle Information for Baby Boomers

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Summary and Link to Interesting Video on Recent Retirement Study

I saw an interesting interview on Bloomberg Surveillance this morning that is worth watching and have included a link below.  Tom Keene interviewed Andrew Sieg, head of Global Wealth & Retirement Solutions at Bank of America, about a recent study on near-retirees and retirees.

A quick summary of some of the points:

  • Tom Keene believes politicians have created an uncertain future for people nearing retirement. Conversations seem to be dominated by this fear.
  • Healthcare costs are the big “wildcard” of retirement expenses.  Retirees on average spend about $20,000 per year on health care costs per year. Baby Boomers worry about healthcare costs more than any previous generation.  Sieg said that it is critically important that people purchase long-term insurance at as young age as possible.  People’s biggest concern is that they want peace of mind during retirement and long-term insurance will help.
  • Sieg said Boomers are radically changing retirement.  Seventy percent plan to work in retirement with about a half doing so by choice.  The optimistic side of this is that many are choosing to use the “longevity bonus” as an opportunity to use their new freedom to pursue careers that they didn’t have time for when they were younger. Many see it as an opportunity to reinvent themselves.
  • Current low interest rates are punitive for retirees.
  • Both Keene and Sieg are concerned that proposals are being circulated around Washington that reduce the incentive to save.  Most people need to increase their saving rate.

Bloomberg TV Video. “BofA’s Sieg on Retirement Planning” Video


A Critical Step in Preparing for Retirement

How Are We Spending Our Money? (click to enlarge)

How Are We Spending Our Money?

Do you have peace of mind about your retirement savings? A key contributor to anxiety is that most of us don’t know how much we are spending now. And we have no idea what our future expenses are likely to be.

A financial planning fact finder can guide you in gathering important information about your assets, debts, insurance, expenses, and goals.

The good news is as you put each piece of the information puzzle in place:

  • You get a feeling of satisfaction and accomplishment.
  • Anxiety drops.
  • Ideas on helpful things to do will become clearer.

The main thing is to get started.  You don’t have to be perfect.  As you gather data, you put yourself in a place to make more realistic choices.

Everyone has a different approach to getting a handle on expense tracking. For example, my brother and his wife wrote down everything they spent money on for years.  This approach was a lot of work, but it helped them free up funds to save for retirement and to do fun things like travel.

I tried their approach for nine months and found it useful.  As I wrote in the post “Tightwad Tips:Small Recurring Savings Add Up”, when we bought a vacation home, we had an added incentive to conserve money. Writing down our expenses helped us come up with cost cuts that weren’t too painful to make.

Planning Helps Bring Peace of Mind

Planning Helps Bring Peace of Mind

After a while, I found this method too time consuming but it taught me to take a look at expenses periodically to see what I could trim.

Now we are at a new stage, where my husband is gradually cutting down on the hours he is working (unfortunately, the money goes down, too!) over the next few years.

So, to take the emotion out of dealing with this new stage, we decided it was time we worked with some investment professionals.  Right now I am gathering information for a “Financial Planning Fact Finder.”

You can get financial planning organizers from most investment firms.  You can also find many variations on the web.  Below are links to examples of worksheets I found on BalanceTrack, a financial education website.  It doesn’t matter if you track your expenses on a complicated spreadsheet or write them in pencil on a piece of paper.  Just total them up each month to see where the money is going.


Tightwad Tips: Small Recurring Savings Add Up


I’m into saving with the least amount of work.  I just don’t have the patience for coupon clipping or other time-consuming money-saving habits.

Still, as we transition into a new stage of life, what is important to us evolves; our spending patterns should evolve as well.  Take the time to review spending to make sure that money isn’t leaking out of the budget unnoticed.  The way I look at it, if we take the time to do this, we increase our chances of securing what we need and of having the resources to do what we most value with our time.

For example, like many other baby boomers, my husband and I decided to buy a vacation home on the west coast of Florida in 2009.  I know, I know, I can already hear the jokes.  Florida–God’s waiting room.  But anyway, it’s been fun and a great place to stay active in the cold weather months.

But it’s not cheap supporting a second home and we need to save more for our retirement years.  So we had to be creative.  We rent out the house part-time. We combed through our routine expenses to see if we could shave a bit off each one.  Pruning expenses helps with saving now, but also helps us to get used to living on less. Looking at credit card and bank statements for bills enrolled in automatic payment plans was a good place to start. They have a way of getting more expensive, and it’s easy not to notice the increases when we have them on “set it and forget it.”  Here are a few of the items we were able to cut:

  • The cable bill. Like some lucky pre-retirees our kids are out on their own and self-sufficient now. (Whew!)  But we were still paying for premium channels that we rarely watched. I dropped the channels and now every month we save a bit.
  • You may be enrolled in a Web or print subscription that you no longer read. Cancelling those is an easy way to cut spending.
  • Call your wireless carrier. They may have a cheaper plan that fits your current calling patterns.  The company is not going to call you up to suggest that.

If you manage to save $75 a month, that adds up to $900 a year.  After five years, that’s $4,500—serious savings without a lot of work.

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BlackRock conducted a survey of retirees, retirement plan sponsors, and workers saving in retirement plans.  A few points jumped out at me:

  • People expect retirement to be an active time in their lives.  Currently, 47% of retirees work or volunteer because they enjoy it while 1% work for income.  However, current workers have dramatically different expectations for the retirement phase. The majority, seventy percent, expect to work for enjoyment and fifteen percent expect to work for income.
  • Over half of plan sponsors are not confident plan participants are saving enough for retirement.
  • Current retirees in the survey were confident in their retirement.  They also had the vast majority of their expenses covered by traditional secure sources of income such as Social Security and defined benefit plans.

How can we use these survey results?

  • Clearly, people nearing retirement expect their lives to be different than the traditional retirement scenario. Some type of work will be a part of their lives for personal satisfaction, and for many, by necessity. We should be exploring ideas on how to make that happen before we retire.
  • This may be stating the obvious, but most of us should be saving more money. Probably a lot more money.


The survey raises a lot of questions for me as well. How is the quality of life of people going to be affected when they don’t have these secure sources of income? Plainly, the practical aspect of affording necessities is a concern for many. But I believe stress levels for retirees and those approaching retirement are elevated and will continue to stay high.

Looking at the big picture—how is the economy going to be affected? (Not to mention the effect of stress on our health.) The United States had a low savings rate compared to other developed countries in the past.  The high level of spending helped our economy grow at a higher rate than other industrialized countries.  Will the loss of secure sources of income be a permanent drag on the economy as people are forced to save a higher percentage of their income?

You can find the survey at: 2012 BlackRock Retirement Survey