What is Your “Number”?

Hello Boomers,

We have all read the articles and heard experts advise that comfortable retirements require million dollar portfolios.  The numbers are so fuzzy and so high that Boomers feel hopeless.  How can they ever get where they need to be?

The good news is that maybe the real number isn’t quite so high.  Georgia State University participated in a 2008 study that found men needed to save 4 to 6.8 times their annual salaries from the years just before retirement.  For women, 4.5 to 7.5 times earnings would provide a comfortable retirement.  Figure out what your number is.  Know where you have to go and construct a plan to get there.   

The Employee Benefit Research Institute reports that the average amount in a 401k account for a 50-year-old is just under $125,000.   If you are 50, earning around $50,000, and your account is at a similar level you could reach your number by working and contributing the maximum each year until reaching your “normal retirement age”. 

But there are dark clouds on the horizon for many Baby Boomers who have lost their jobs and who are finding it difficult to get another.  The Urban Institute reports that a job layoff in one’s 50’s or 60’s reduces family wealth (not income) by 21% for couples, and 33% for single people. 

It isn’t just the lost wages while we are unemployed that diminishes whatever wealth we have accumulated.  It’s also the loss of savings and future earnings on those savings as we draw upon resources to pay the bills.  It’s the loss in current and in future incomes as opportunities diminish and wages slide lower.  And it’s the premature sale of assets (homes, insurance policies, stocks, etc.) as we scramble to pay the bills.

So what are Boomers to do when no one will hire then?  When no one will pay them the salary they were getting?  They will reinvent themselves.  They will create new opportunities.  They must.  Because this is the new normal and we need to accept it, get over it, and get back to work.  

So how does a Boomer create income in an unwelcoming job market and a skittish economy?  Employers have work that needs to be done but they are loath to take on too many costs so offer your services as a consultant rather than as a full-time employee.  

Offer to work on their projects on a contract basis.  Take temporary positions to keep your skills in tune.  Start a business if you can.  You  might not replace what you lost but you can reduce the strain upon your wealth and the sooner you do that, the better your future will look.

 

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