Some baby boomers are skeptical about the stock market after being burned during the downturn 2008/2009. Now that the stock market has been booming for several years, it may be time to consider a financial planner who understands estate planning and investing as you close in on retirement. Having a will set up and assigning a power of attorney can give you peace of mind that your family will be protected.
According to research by Gallup Economy, most baby boomer intend to work longer. For every additional year you stay engaged in the workforce, you can be maxing out your Roth IRA, 401(k) or other retirement vehicles. The research showed those born between 1946 and 1964 aren’t going to retire as early as their predecessors. The average retirement age has shifted from 57 to 61 in the past 20 years. Moreover, 10 percent of today’s baby boomers say they may never retire. Twenty-seven percent expect to retire at age 64 or younger; 24 percent plan to retire at age 65, while 39 percent intend to keep working until they are 66 or older.
Dealing with debt
Even if you have consumer debt, you can invest in the stock market. Keeping cash on the sidelines is not a good idea during a bull stock market, or any stock market condition for that matter. Since baby boomers plan to keep working longer, they should be able to come up with a household budget that includes debt repayment as well as money set aide for retirement savings. An investment counselor or financial coach can help you figure out how to invest your savings by taking the emotion out of the process. One smart way to eliminate debt is to allocate 10 percent of your income for debt repayment on top of the minimum owed.
Making catch-up contributions
As a baby boomer, you are old enough in most cases to make catch-up contributions to your retirement accounts. For IRA’s you are allowed to contribute $6500/year if you are over 50. That is $1000 more than the younger crowd. After paying off their mortgages, some people take the extra money they used to allocate for their mortgage and use it for catch-up contributions to their retirement accounts. Another option is to take a spouse’s extra income to max out retirement contributions instead of spending on entertainment, home renovations or vacations.
It’s important to get and stay invested. If you are worried that you won’t have enough money to do everything you want to do in retirement, it is a wise idea to continue to earn income and invest it wisely. Whether your investments are up or down, it’s important to have a professional help you with estate planning so you know your hard work isn’t going to be in vain.
By Financial Social Media and Jimmy Hancock