A Baby Boomer's Guide to Retirement

The oldest hippies of the 1960s begin retiring in 2011.

Baby boomers are the post-World War II children born between 1946 and 1964. The first boomers reach 65 in 2011 and enter the stage of life characterized by Social Security and Medicare. Retirement has become a focal point for this generation. Boomers looked forward to enjoying a comfortable lifestyle during their senior years until the financial crisis of the 2000s brought their dreams face to face with a new reality.

The Retirement Phenomenon

Funding a retirement that will outlast life expectancies has become a challenge.

Retirement is a 20th century trend and an evolving 21st century lifestyle. A person leaves a job or career and begins a new chapter in life. Some people are forced to retire due to age restrictions, early retirement incentives, layoffs and terminations. At the turn of the 20th century life expectancy was 49.2. Millions of today's boomers will live well into their 80s or 90s, and an increasingly large number will reach 100-plus. How to spend these years and finance retirement has become a major national debate.

Social Security and Medicare

Medical expenses, including drugs and long-term care, swallow up a significant portion of retirees' incomes.

Workers accumulate Social Security benefits and can begin collecting partial benefits at 62 years of age. Eligibility for Medicare health care benefits begins at 65. This milestone has come to define when most Americans can afford to retire. Health care expenses have become a major budgetary item. A lot of people cannot afford to buy their own health insurance. Retired employees covered by employer or government plans can retire before 65. Individuals can sign up online for both Social Security and Medicare benefits. Social Security is a supplemental income program. It was never meant to cover all of an individual's retirement expenses. Additional funds are necessary to close the gap.

When to Retire

Boomers want to be assured they can afford to do the things they want, such as travel, in retirement.

Applying for benefits is the easy part. Deciding when to retire is the real dilemma baby boomers face. Boomers need to know if they have enough money to cover expenses and if their resources will last decades. There are online retirement calculators to assist in evaluating an individual's financial situation. Bankrate.com has a good one. Working with a financial planner to analyze current financial data and formulate a strategy for drawing income during retirement may help a person feel comfortable she is making the right decision. The Department of Labor has an excellent website with articles covering financial issues in preparing for retirement.

Where to Live in Retirement

The dream of many boomers is a second home for seasonal and recreational use.

Many people move to new communities when they retire. There are many reasons people relocate. They seek better weather, recreational activities, closer proximity to family and a cheaper cost of living. A lot of people stay in the same town but downsize housing. They sell their large home, pocket some of the proceeds and buy a smaller residence. Saving money on taxes, utilities and maintenance releases funds and time for other activities. Baby boomers considering a move should list their top requirements for a home, desired community amenities and how much they can afford. The goal of many boomers is a second home in the vacation setting of their dreams. Research various places nationally and internationally if considering an overseas move or second home. The AARP website has outstanding resources to help individuals work through questions on when and where to retire.

What to Do in Retirement

Young boomer retirees want time for sports and recreational activities.

Boomers are retiring from careers and shifting to part-time employment, volunteer activities or full-time work they enjoy. Retirees are "in it" for the joy of the job, fulfillment, the activity and the social interaction. Extra income plays a part, but the money is not the sole reason for working. Individuals can work and collect Social Security. The SSA website helps individuals evaluate the advantages and disadvantages of working and whether or not to collect benefits at different ages. Many people spend a lot of time traveling. Hobbies and activities people love, but had little time to indulge in during full time careers, now can become a focus of one's time. Boomers are younger in spirit, healthier and more physically active than previous generations of retirees. They are redefining what retirement is and what it means to be a senior citizen.

References

• CRS Report for Congress: Life Expectancy in the United States
• Social Security Administration: Applying for Benefits
• Bankrate: Retirement Shortfall Calculator
• Department of Labor: Taking the Mystery Out of Retirement Planning
• US News: Planning to Retire
• Wall Street Journal: Working Beyond Retirement: For Money, Identity, and Purpose

Resources

• Financial Planning Association: Find a Planner
• AARP home page
• Department of Labor: Taking the Mystery Out of Retirement Planning
• Social Security Administration: You can work and collect Social Security at the same time
• Boston College: Working in Retirement