NDSU Extension Service - Ramsey County


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Retirement Readiness

Retirement Readiness


          The oldest baby boomers reached age 60 in 2006, and every day more baby boomers are thinking about retirement. For many baby boomers though, the word "retirement” is a bad word, and baby boomers don’t like to see themselves as retired. They want to see themselves as involved, as very energetic, and very engaged in life.  Baby boomers often don’t retire - they change gears.  They volunteer full-time, go back to school, start another business or begin a new hobby. 

          The Retirement Readiness report from the Employee Benefit Research Institute finds that nearly half of boomers ages 56 to 62 are still at risk of not having enough retirement income to pay for basic expenses and uninsured health care costs.

          It used to be that many Americans entered retirement having paid off their mortgages and most of their other debts. Nowadays, more and more senior citizens are struggling with mounting debt levels, fueled primarily by mortgages and credit cards.

          The average debt held by senior citizens ballooned to $50,000 in 2010, up 83% since 2001, according to Federal Reserve data.  Only 24% of homeowners over the age of 62 had mortgage debt in 1992, but that figure soared to 45% in 2010 and remained mostly stable.

          The increasing debt load among the elderly could pose big problems, especially since seniors are more likely to have growing medical costs and less likely to be still working.

          If you feel a need to emphasis your retirement planning more, there are several basic steps that can make a major difference. Step one for baby boomers is to reduce spending.  By taking the time to examine your spending habits, you can find ways to cut costs on everything, particularly big- ticket items like cars and vacations. Once you reduce your spending, have those savings automatically deducted from your paycheck or checking account and transferred into a retirement, savings or investment account. Every little bit helps, not only during your working years, but also after you retire. If you can get accustomed to a more modest lifestyle during your remaining working years, the better able you'll be to enjoy a long retirement without fear of having to make major late-life cutbacks.

          Keep working. Delaying retirement, even by just a couple of years, can increase your lifetime retirement income, perhaps substantially. Not only are you continuing to bring in income, but you're also likely socking away more cash in tax-advantaged retirement accounts. An alternative to delaying retirement is to retire gradually by reducing your work hours or switching to a part-time position after you hit your normal retirement age.

          Delay benefits. Postponing the collection of retirement benefits, including Social Security and pensions, will usually increase annual payouts once they're ultimately collected. In general, avoid collecting benefits at the earliest possible age, unless you're in poor health or face an urgent financial need. Remember, however, that there are mandatory withdrawal rules on some types of retirement accounts.



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