Not Your Parents’ Plan
Baby Boomers face a new set of rules for retirement
“Baby boomers are completely rewriting retirement for today’s realities,” says Chuck Underwood, founder and principal of The Generational Imperative, a Cincinnati-based consulting firm. His clients include Macy’s, Hewlett-Packard, and Campbell Soup, and he lectures on a variety of generational topics, including generational marketing and workforce strategies.
The reasons for this shift are both lifestyle and financial, Underwood explains. “This is a generation that loves to work and be productive. They grew up in the ’50s and ’60s with the core values of endless optimism and opportunity.
“Some were on target until 2008, and then many lost their primary nest egg as the value of their homes fell.” He estimates that 35 to 40 percent of baby boomer retirees are underfunded.
According to AARP’s analysis of the recent Employee Benefit Research Institute (EBRI) 2013 Retirement Confidence Survey, 56 percent of workers age 50 and older polled are not confident that they will be able to live comfortably during retirement.
Increased life expectancy combined with interest rate reductions have resulted in a worst-case scenario for those hoping to retire soon. “Times are very different from when our parents retired, and we can’t go that same route,” explains Jim Casey, CEO of Integrated Wealth Management. Casey points to shrinking and disappearing pension plans and Social Security’s shaky future.
“Most people need to readjust their retirement strategy,” he says. “They can’t roll over CDs or use fixed instruments like Treasury bills anymore. Also, inflation is on everyone’s mind within the industry. Today, every retiree’s portfolio needs some growth potential. Flexibility in asset adjustment is a must. The definition of security in retirement today can disappear quickly with inflation and bad assets.”
Wealth advisor Steve Janachowski, of Tiburon, California-based advisory group Brouwer & Janachowski, tells clients to formulate a retirement goal and paint a picture in their mind of how they want to live in retirement. “Figure out what that means in dollars, and then come up with a plan,” he explains. “Look at it like a road trip you’re taking. Along the way you’re making sure your gas tank is full.”
One baby boomer who mapped out his road trip early on is Gary Walker of Palm Desert, who retired after 30 years of teaching high school English, drama, and speech. Today, Walker teaches the same subjects five days a week, splitting his time between College of the Desert and Art Institute of California. “My retirement is defined by my structure of what I want to do and playing by my own rules,” says Walker, who also pens a weekly theater column.
Janachowski advises taking a simple, goal-driven approach to retirement planning. “People get confused and overwhelmed because of minutia, like whether to be in Real Estate Investment Trusts or annuities,” he adds. “It’s about keeping the tank full to reach that goal.”
Whether you plan on working past traditional retirement age, working part-time, consulting, or just improving your golf game, it’s clear this is not your parent’s retirement. For many baby boomers who grew up when a secure retirement was taken for granted, the promise of a “golden age” is an illusion — not something to bank on.