Why didn’t this retirement thing seem so tough for Mom and Dad? Was there something that they should have told us that they didn’t? We Baby Boomers are supposed to be the advanced generation with new ideas and the ones who have everything under control. Yet it seems like retirement was easier and less stressful for our parents. In reality, not all parents of Boomers had it easier, but there are many differences between the generations.
Most of our parents worked at their job, career, or business until they were 65…and often for the same employer. This is not such the case for many Boomers. Often it is not the choice of the employee, but a function of what is happening with the employer. The end result however, is that many Boomers have found themselves leaving what had been longer-term employment in the critical period 10 to 12 years prior to their target retirement date. This normally would have been the prime earning and saving time with a familiar employment context.
Employment change at that juncture in life often results in a reduction in income and, correspondingly, in the amounts being put toward savings. New employers may not offer the same type of retirement programs, such as pensions or deferred profit sharing. These factors all contribute to an end scenario that is less attractive and less certain than the one our parents experienced. Most of our parents had only one or two employers throughout their working years. And while not every employer provided a pension plan, they were more prevalent than they are today, and a greater number of the pension plans were the more generous defined benefit programs.
Many Baby Boomers started their families later in life, and children are living at home longer than ever before. So the Boomers may not have had an empty nest as early as their parents did. Even if the Boomers did successfully launch their offspring, it is quite possible that one or more of the children have returned to the nest, perhaps with grandchildren in tow.
For the Boomers, the rate of divorce runs between 40 and 50 per cent. This is far higher than the experience of their parents. As anyone who has been through a divorce will tell you, in addition to the huge emotional toll there is a substantial financial cost. In many cases, this has disrupted the retirement savings and benefits that had accrued to this point. Remarriage and blended families also put pressure on financial resources.
Overall, many Boomers find themselves being pulled from many sides, with parents who need help, plus adult children, grandchildren or even a marital partner who needs support. It is a tug-of-war that involves emotions, time and money.
The positive? We can work it out. My hope is to see my clients enjoying the golden years of their life and enjoying it to the fullest. This can be achieved by finding the most efficient ways to use the assets clients have accumulated in order to create the cash flow to fund their retirement.