Educate boomers in retirement planning to help them avoid disaster

By Jesse Giuliani


BY: Michael Ham
Financial Planning Expert & Personal Budget Coach
My Money Track

Nearly half of all baby boomers say they could not cut personal spending by 10 percent or more without a dramatic change in lifestyle. Really? This is sad but highlights where our generation has gotten itself over the past 25 years. By sacrificing our retirement planning to the needs of our children and aging parents, the chickens have come home to roost, so to speak. More than 1 in 4 boomers keep extra cash in low interest earning accounts in case a family member may need financial help. This can destroy or at least severely cripple a retirement plan.

But with the uncertain economy and shaky employment landscape, one misstep financially and you’re retirement years could be delayed or whipped out altogether. This fear of potential disaster has also kept almost 60 percent of baby boomers investments in way too conservative of a mix for any hope of significant growth. Many still use CDs, savings and checking accounts for a large portion of their investment mix.

CDs and similar type liquid investments are great for a rainy day but earn less than the inflation rate. Factoring in income taxes too and one is left with a true loss, long term in the buying power of the boomers retirement dollars. With the crazy volatility in the stock and real estate markets, boomers perceive them as too risky to invest.

But, if one has more than 10 years left until retirement, real estate and stocks are the single best performing investments available. Thus, the conundrum. There are higher earning alternatives to CDs and savings accounts, that offer liquidity for emergencies (such as health and accident issues) while still racking up healthy long term gains. In fact, using alternative investments geared for such emergencies in today’s environment makes great sense.

So much sense in fact, that almost 6 in 10 boomers are dissatisfied with their CDs and savings accounts and their paltry returns. Another dilemma and added conundrum! But if boomers could take the time to understand the alternatives and figure out exactly how much risk they can live with, life gets much better.

Information and education along with real-time, real-life success stories of planning and investing. Not that anyone needs to be a do-it-yourself personality … seek out advice and help and you’ll be comfortable investing in a better diversified mix of assets. And over the long term you will likely double or even triple your long term growth and earnings over CDs. Many boomers don’t realize that they can invest in anything other than CDs in their IRAs. But you can and the IRA is a great place to own growth type investments, especially in a Roth IRA. That is because longer term investments match up with the longer term nature of an IRA, in general.

But boomers are vulnerable to the unknown; the past 10 years have been a lost generation of sorts, in both the stock and real estate markets. While it would’ve been a good idea to stay “on the sidelines” it is now becoming more evident that it’s “time to get into the game,” with your retirement planning.

Don’t miss Mike Ham’s session at 10:00 am on Friday, August 26th.