Here are “Five Easy Pieces”* of advice to improve your Baby Boomer financial life. By “easy,” I mean “the vast beneficial outcome is worth the initial effort.” You’re a Baby Boomer if you were born between 1946 (you’re now 69 or 70) and 1964 (you’re now 51 or 52). The good news? You’re living longer (and hopefully better) lives than your parents and grandparents. The bad news? You’re living longer and hopefully better (more expensive?) lives! In other words, you face decisions and issues your parents or grandparents may not have faced before you.
For example – Joan is 58. She plans to retire at age 65. She doesn’t know it yet, but she will end up living to age 93. She will be in relatively good physical shape until she is 89. This means 7 years to lay the foundation for retirement and another 28 years of retirement – including 4 years of a degree of physical disability. Since Joan is 58, we’re looking at the next 35 years (or more than 1/3 of her life).
#5: Fees, fees, fees. An average American spends more time analyzing the cost and qualities of a new TV than the costs and qualities of an “advisor.” Need help knowing what questions to ask so you can find the best person for you? Go to www.napfa.org , click on “How To” Guide and read or download this clear booklet and navigating the unclear investment and planning advisory world. How much do you pay someone now to help you manage your investments? How much do your investments cost (e.g. A, B or C shares and underlying expenses). If you own shares only, is your portfolio sufficiently diversified? Were you sold annuities that you don’t really understand (and that may turn out to be very expensive for you to own)? Do you need someone to manage your investments only, or provide financial planning advice? If you’re not sure, read the “How To” Guide and become an informed informed consumer.
#4: Don’t make decisions about Social Security of lump sum/pension choices without getting input from an objective financial planner…or you may be leaving significant money on the table. The Social Security Administration is not designed to provide advice on the best strategies for you! If your gut reaction is to take the money and run, you could be making the wrong decision.
#3: Consider the last 15+ years of your life. Where will you live when you’re 83? In a large home with stairs? Will most of your wealth be concentrated in your home as your retirement years tick by? Who will care for you if you’re unable to do so yourself (don’t rely on a spouse to be able to care for you alone). Get objective advice on long-term care planning and Reverse Mortgage options from a financial planner who does not benefit from selling either.
#2: Consolidate your holdings and paper trail so you know what you own. Doing this is also kind to your future heirs. Do you have old 401(k) plans scattered across the landscape? Multiple accounts run by various brokers? Old, outdated estate documents? Every year there is millions of dollars of unclaimed life insurance because your beneficiaries weren’t aware of policies you hold.
#1: Include your adult children or siblings in a frank discussion about where your assets are located and how you prefer to be handled if you end up in hospital. You don’t need to give your family or friends specific dollar information, but they should know your preferences and asset location if you become disabled, unconscious or die.
It’s not nice to end on this note, but death and taxes are the 2 inevitabilities we all face. Make it as easy a process as you can for your executor and heirs.
*Based upon the 1970 movie “Five Easy Pieces.”