Throughout our working lives we have been looking forward for retirement. We boomers believed that when we retired, the things that stress us out during our working years would miraculously go away. Now that we’re retired we have found that is not the case. Baby Boomers have retirement concerns, and most boil down to money issues. Wouldn’t be nice if we could just stop stressing over money. Is that even possible? Let’s see where that question takes us.
Causes of Stress
It’s interesting to examine the sources of baby boomer stress, and to understand the root of these sources of stress.
Boomers are stressed because we have to coupe with the following;
- Most employer administered fixed pension funds no longer exist.
- Not enough money in our retirement fund.
- Increased life after retirement.
- Increasing cost of health care.
It’s obvious that everyone of these sources of stress has the same root cause, which is, not enough money. The root of all evil.
A Closer Look
Pension Funds. Past generations have had the benefit of employer administered pension funds. These pension plans were every generous. The fact is that most retirees needed only to draw on these pension plans to finance their entire retirement.
During the Reagan administration IRA, and 401K plans were introduced to supplement traditional pension plans. However employers, over time, have used the advent of IRA’s and 401K’s to eliminate pension plans. That’s a shame to, since the pay out on the pension plans far exceeds the pay out on the IRA’s and 401K’s.
Today the pension plans only exist for government jobs, and through labor unions.
Insufficient retirement fund. Recent studies have shown that, in order for boomers to comfortable during their retirement, they need to be putting 10% of their annual income, before retirement, into a retirement fund. Further, that 10% estimate seems to be heading towards 15%.
Increased life after retirement. The life expectancy has increased to 76 years for men and 81 years for women. That represents an increase of 18 years.
The problem is that, with baby boomers living longer, retirement has become more expensive. Boomers are stressing over where that extra money is going to come from.
Increased cost of health care. The latest and greatest estimate for the cost of health care for a retired 65 year old couples is $280,000. This is a out of the pocket expense and this cost will be incurred over the remainder of their lives.
I hate to say it but this health care cost estimate does not sound out of line. Since the time in life when we boomers are most likely going to utilize the health care system is after we retire. God forbid we will need long term health care. Long term health care can use up a person’s retirement in no time at all. We need to be thinking about a health care plan, which will supplement Medicare.
How Not to Stress
If we are not among the fortunate few who qualify for a pension plan, planning for our own retirement is left in our own hands. Most of us don’t possess the skills required to successfully structure our own be retirement financial plan. And that’s Okay. I am challenged at times to balance my checking account. And a retirement financial plan is way more complex than a checking account.
So what are we to do to relieve ourselves of all that stress? Well when we’re sick we see a doctor. When, we have legal problems we contact a lawyer. If we have to build something we hire a contractor. So if we are beating our head against a wall, trying to come up with a workable retirement financial plan, why not get in touch with a financial adviser.
Back in the day when pension funds were widely available, employees would contribute to the fund. Employers would add their matching funds. And then all that money was turned over to an investing professional to make that initial investment grow be into amount which would easily sustain a person throughout their retirement years.
It stands to reason that if we are to build a retirement fund which will adequately sustain us throughout our retirement, and not stress over it. We may likely need to enlist the help of a financial adviser.
Often we stress over stuff, and we really don’t have a decent handle on what it is that we are stressing over. And so it is with retirement. We may need to take the time to examine our retirement finances.
For example, if we haven’t been putting 10 to 15% of our annual income aside for our retirement fund, we may not be financially prepared for retirement. Determining that could, in and of itself be a stress reliever. Now we can stress over how to solve that problem. And the solution could be as simple as putting together a more aggressive savings plan. Or working longer.
The point is that, knowing that we have a problem, and taking the steps to solve the problem, is less stressful than not knowing we have a problem, and not identifying the scope of the problem.
Working longer has become a favored solution to our retirement financing stresses. There is a saying that states that 70 is the new 65. Once again, identifying the source of our stress, and formulating a plan to eliminate that source of that stress, will make our retirement years a lot less stressful.
What we have to do now is work the plan. It is quite likely that our new retirement plan does not include retiring as early in life as we once anticipated. We have found, like many boomers, that we have not saved enough to finance our retirement, or that our retirement is more costly than we once thought.
That leaves us with two options;
- We delay our retirement, and continue working until our retirement nest egg is sufficient.
- Or we go ahead and retire, and come up with some kind of way to supplement our current retirement nest egg.
Delaying our retirement, and continuing to work past our planned retirement age is a good plan, and as long as our employer is willing to keep us around, and it is easy to implement.
The second option, however may be require a little thought in order to put into action. The last thing that we want to do is to commit ourselves to a job, after we retire, and find that this supplemental income source, is going to become a source of unwanted stress.
The best way to avoid this stress is to be picky about type of work we are willing to do after retirement. All our life we have very likely worked at a job because the pay was right. However, we may have not enjoyed what we were doing, and that job may have been the source of much stress. We don’t want to make that mistake again.
Why shouldn’t we be able to do something we enjoy, to supplement our retirement income. Just as we have had to reflect upon what is causing our stress. We can decide what we enjoy doing. And figure out a way incorporate that activity into a supplement retirement income. Hence no more Stress.
Chances are that we have been stressed out over one thing or another throughout our entire lives. Stress is a part of life, and we are never going to be able to eliminate it altogether. With some planning we can make the stresses of retirement manageable.
That’s all I got for now. I hope that is post has helped UN muddy the waters of retirement stress. I do want to hear from you if you have any thoughts to add to mine. Or even if you disagree with anything I have written. You can leave your comments below.