By Bill Broich
How much money do we need for retirement? How much is enough? We have all seen the ads on TV, and the long green line leading to success. But here is a reality jolt.
The Baby Boomer generation is here and we are in force, 10,000 baby Boomers turn 65 each day and the total of this massive movement is over 75 million and I am one of them.
In a recent report regarding retirement confidence survey, the Employee Benefit Research Institute found that among workers age 55 and older, 43% have saved less than $25,000, and 36% have saved less than $10,000. They also found the underlying factor about retirement for Baby Boomers is fear.
Considering the epic failure of the Baby Boomer Generation to adequately provide for their retirement needs another important issue needs to be faced. The demand for social services by this large group of new retirees could easily overwhelm the social and health care systems.
The survey also pointed out that the Baby Boomers greatest fear was having longevity of income, income that will last through their retirement years. Of course the dependable social security retirement check will pay as long as it is needed, that will never be enough. The simple fact of inflation puts the minimal retired at a huge risk.
For many Baby Boomers reality might not be a happy scenario, not having enough income also can create many other issues, dietary, health care, stress and ultimately a negative effect on longevity.
The importance of income that cannot go away cannot be overstated; income for life will be the link to help Baby Boomers through this difficult time. There really is only one option to make this all become reality, annuities. Annuities allow for funds to be received over any definable time period, even lifetime.
To add more factors to the need for retirement planning according to the survey is that less that 30% of Baby Boomers have a company pension from which can provide income. For the remaining 70% pressure for income will demand that safety and security be at the forefront of any retirement decision and that again leads to annuities.
Many Baby Boomers have already begun the move to safety and security through the use of annuities. The survey reported an increase in guaranteed annuities rose from $450 million in 2007 to $2.5 billion in 2012, clearly the Baby Boomers are buying and using these products.
As new products are developed for this giant market other important factors could benefit from fixed annuities, primarily Long Term Care protection. Currently many annuities allow for riders to be purchased to provide basic protection but over time many new additions are expected, additions that will address deeper and more important needs.
Annuities are terrific for guarantees and stability but no baby boomer (if options exist) should place all their retirement funds in an annuity strictly because of the other great fear, inflation. Once the basic retirement plan is set in place some funds need to have a manageable level of risk to help offset inflation. The exact amount would depend on an individual’s personal situation.
The final piece in planning retirement needs to be when the Baby Boomer decides to access social security. Many options exist for extensive planning and how best to use your available assets.
Planning is the key and using your assets correctly will help reduce stress and maximize the enjoyment of the “Golden Years”