Financial challenges of Baby Boomers
Kansas Insurance Department
TOPEKA — Sandy Praeger, Kansas Commissioner of Insurance, is urging Kansans to take a look at the challenges that Baby Boomers face in planning a financially secure retirement.
“Each day about 10,000 Baby Boomers enter their retirement years,” Commissioner Praeger said. “They are members of a generation who are largely unsure of their financial future. According to recent research, Baby Boomers’ confidence in their financial preparations for retirement has been steadily dropping over the past four years, with only about a third optimistic about their situation.
“Through the course of their working years, a unique set of challenges has emerged, including changes in employee benefits, longer life spans, and uncertainty with Social Security and Medicare, as well as health care.”
Commissioner Praeger said National Retirement Planning Week, April 7-11, is a good time for Kansans to develop, review or revise retirement plans. Below are five tips from the National Retirement Planning Coalition that might help.
Review your finances, develop a budget and uncover savings
A first step toward planning for a financially secure retirement includes understanding your current financial state. Review your finances to learn what assets you have and to determine all of your financial commitments. Once you have a grasp on your personal balance sheet, you then can develop a household budget. Remember that the most important takeaway from budgeting is to ensure that you are not outspending your income.
Add savings to your retirement accounts
A great practice to start today is to make regular contributions to your retirement savings accounts. Employer-provided retirement savings plans, such as a 401(k)-style plan, are often tax-deferred accounts, meaning your contributions and the investment earnings within are not taxed until you withdraw them. Oftentimes these plans also feature a contribution match from your employer.
Determine a target retirement age
Establishing your target retirement age is a significant part of the goal-setting process for your retirement. Once you have your goal retirement age, you also can proceed to answer many other important questions related to your retirement. For instance, at what age do you intend to start collecting Social Security benefits? Collecting Social Security before your full retirement age can permanently reduce the size of your benefit, while delaying benefits can boost your Social Security income.
Calculate your income needs in retirement
The Insured Retirement Institute, which leads the National Retirement Planning Coalition, offers a suite of retirement planning calculators available on irionline.org and RetireOnYourTerms.org. The Ballpark E$timate by the American Savings and Educational Council, another coalition member, is another popular tool that can help you quickly identify how much savings you may need for a comfortable retirement. If you feel uncomfortable with your calculations, consider consulting a financial advisor who will have specialized expertise in helping clients prepare for retirement.
Monitor your progress and update your plan as necessary
Retirement planning is not a one-time task. Achieving a financially secure retirement requires monitoring your progress and adjusting your plan to meet changing conditions.
An additional tip: Check your insurance
“I would add a sixth tip,” Commissioner Praeger said, “and that would be to consult your insurance agent and financial adviser about your insurance needs. As we grow older, insurance needs change. Making a yearly appointment with your agent or planner about what kind and how much insurance you need, whether personal or property, is an excellent idea.”
Sandy Praeger is the Kansas Commissioner of Insurance.