Retirement Financial Planning for Baby Boomers: The Top 4 Goals

The 2008 recession and financial crisis deteriorated American baby boomers’ confidence in retirement planning, spurring a shift in their financial goals related to their later years. And while the ability for baby boomers to reach their goals should improve with the recovering economy, not everyone is confident about realizing their priorities in retirement. Only one-third, or 33%, of boomers were very confident in their ability to provide financial security for themselves and their families in 2012, compared to more than half, or 51%, of those surveyed five years prior, according to data from a 2012 Ameriprise Financial study. 1. Being financially secure “The No. 1 goal is not to run out of money as they near retirement,” says Chad Noyes, managing director and financial advisor of Chicago, Ill.-based Hoopis Financial Group, a member of MassMutural Financial Group. “When you retire and take that last paycheck, you flip a switch — now you have to worry about having enough money for the rest of your life and as people are living longer, that planning involves wildcards.” Seventeen percent of baby boomers reported being very confident about their own financial futures — a significant decline from 2007 when 39% reported the same, Yet, a lack of confidence doesn’t mean baby boomers don’t care. In fact, 80% of those surveyed say a top retirement goal is to be financially secure for themselves. “They don’t want to run out of money, or burden their kids,” Noyes says, noting that including loved ones in retirement planning when appropriate can help when prioritizing financial goals. 2. Helping children, grandchildren pay for education The confidence baby boomers have when it comes to helping their children or grandchildren pay for their education has dropped from 2007 to 2012, 24% versus 39%, according to the Ameriprise findings. Yet, 55% reported that to be an important goal in 2012. But Noyes advises baby boomers focus on their own financial well being over saving for their kids’ or grandkids’ education. “When you’re younger, there are a lot of ways to get financial help with education, such as student loans for college,” he says. “But there’s not as many ways to get financial help for retirement.” In fact, some boomers need to take a more realistic look at how the financial support they provide others may be throwing their retirement plans off track, Ameriprise says. 3. Leaving a legacy Baby boomers care about leaving behind a legacy, whether it’s an inheritance to a loved one, or donation to a charitable cause. Thirty percent of baby boomers say leaving an inheritance is important to them, and about 25% also feel strongly about supporting a charity, or cause, according to Ameriprise Financial data. Leaving behind an inheritance has fallen in importance, but for those with more assets leaving behind a legacy becomes a bigger objective, Noyes says. But boomers’ confidence in the ability to preserve wealth to leave to their children fell from 28% in 2007 to 16% in 2012. Likewise, their confidence in ability to support a charity or cause that’s important to them fell from 29% to 18%. Interest in donating to a charitable cause reflects many baby boomers’ values and post-retirement activity, says Spencer Hall, managing partner with Retirement Planning Services, LLC in Knoxville, Tenn. “We see a lot of clients who end up retiring, but continue to work part- or full-time with a charitable group,” Hall says. “As baby boomers align their time with their values, the next step is often to leave a portion of their estate to that charitable cause when they pass away.” 4. Continue current lifestyle in retirement For baby boomers who want to enjoy their current lifestyle, in addition to having extra spending money for entertainment and travel, retirement planning can mean making those desires a reality, financial planners say. “Boomers want to maintain the lifestyle they’ve grown accustomed to,” Hall says, adding that many want to use their newfound free time to try new experiences. “It’s not as tremendous as a concern as having enough resources to live on, but it is a high priority for a lot of folks. They want to have the resources to do some of the things on their bucket list.” But confidence in attaining that goal, just like other high-priority goals, among seniors has dropped. One-quarter, or 27%, of boomers say they are very confident that they’ll be able to continue their current lifestyle in retirement, compared to 44% who believed they would in 2007, according to the Ameriprise Financial study. Ultimately, retirement planning far in advance can ease some of the anxieties boomers have surrounding the attainability of their retirement goals, industry experts say. Yet, 19% of non-retired respondents ages 55 to 64 report having no retirement savings or pension, a July 2014 Federal Reserve report suggests. “While the No. 1 objective is not running out of money,” Noyes says, “Retirement income planning is key to managing income throughout retirement. There’s different factors to address, including, ‘Where is the money coming from?’” Baby boomers should consider whether they are relying on social security, an IRA or ROTH IRA, a 401(k) plan, expected inheritance or a combination of financial sources to fund retirement to ensure they can meet their financial goals, he says. “The financial services industry keeps evolving, and there are always new products and tax guidelines, even for someone in the industry it’s hard to keep up,” he says. “That’s why it’s so important to develop a relationship with an advisor who understands your goals and objectives.”