Whether you want to admit it or not, the Baby Boomer generation is a large demographic. They have a large impact on society as the oldest members of the generation as well into retirement and the youngest are just starting to consider stepping away from the work force. The sheer numbers of the Baby Boomer generation will continue to have an impact on the economy and healthcare for decades to come. Keep in mind that they are living longer than past generations thanks to advances in healthcare and medicine. Why does all this matter? Well, it matters because any large generation moving into retirement age is going to require resources and will have economic impacts. For example, an a large aging population will most likely put a big strain on Medicare or Medicaid. This could have huge impacts on government budgets and how other governmental programs get funded–particularly programs that may impact younger generations. As for the economy, with more Baby Boomers passing away as time goes on, markets that needed them to survive may find the going tough as their customers are no longer there or no longer need their services and/or products. There is also the fact that aging parents and relatives can put a serious financial and emotional strain on their families. This is important to think about for both younger generations as well as those moving into retirement. If you are younger, you will need to think about whether you have the finances to care to for an aging parent. You will also want to have discussions with that aging parent or relative about the type of care they want and the finances involved. If you are part of the Baby Boomer generation and moving into retirement, then you may want to start talking with your children or grandchildren (or nieces or nephews) about the type of care you want and what your finances will allow. This doesn’t have to fall on one generation, but should be a multi-generational effort to make sure that all are on the same page and understand what needs to be done. If you need help with the financial discussions, you should speak with a certified financial planner or wealth manager. They can help you to get an idea of where things stand and what products/services you may want to consider in the future. There has also been a lot of research done on the aging Boomer generation, so you may also want to read up on that and the potential impacts that may lie ahead as Baby Boomers age.
Whether you want to admit it or not, healthcare costs are going to be a big factor in your retirement. Yes, you can get help in the form of Medicaid or Medicare, but chances are you will have to pay for at least some of your healthcare costs in your later years. It’s better to recognize that now, while saving for retirement, than later on when you are in retirement. I understand that you most likely won’t be able to predict exactly what your healthcare costs will be in the future, but you can at least look at what your projected income might be and how that may factor into your eligibility for Medicaid or how much you may end up paying with Medicaid. Taking those costs into account while planning for retirement can ensure that you have enough saved away. If you realize that you won’t qualify for Medicaid, that will tell you that you will most likely need to save more to cover the potential future healthcare costs. The potential costs of retirement healthcare can also factor into the type of investments you make. You may want to invest in assets that will guarantee returns well into the future and which may provide money later in retirement that can help offset costs associated with aging. As always, if you have questions about incorporating healthcare costs into your retirement planning, you should speak with a certified financial planner to make sure you are making the right moves.
Medical expenses are one of the biggest retirement savings killers. All it takes is one unplanned medical emergency or issue and the savings you worked so hard to build up can be decimated or your retirement plans left greatly altered. Thus, along with your finances, you should also be thinking about health insurance in retirement and how you plan to cover yourself once you stop working. This will require exploring Medicare options as well as possible employer options (i.e. if it is part of a retirement package or retirement benefits). As part of that process, you will want to determine what those insurance costs will be and how that factors into your retirement savings. If you have questions regarding saving for retirement, you should speak with a certified financial planner.
With each generation comes new medical breakthroughs and refinements that allow people to live longer, healthier lives. That longevity gives people more time to pursues interests, careers, education, and enjoyment that past generations may not have had. Longer lifespans also require more financial planning, especially if retirement age remains the same as past generations. Whereas past generations may have put little to no thought into retirement planning, current generations are planning on 20-30 year retirements due to the ability to live longer. This means that the amount that must be saved for retirement is increasing with each generation and that saving needs to start earlier and earlier in order for people to meet retirement’s financial requirements. Furthermore, the safety nets that helped to keep retirement costs down for past generations–social security, medicare, medicaid–are changing in the current political and social climates and will most likely either not exist or exist in a drastically different form when today’s younger generations (those under 40) retire. Those changes will only add to the burden of retirement saving. While living longer is a good thing for society and individuals, it also means that financial planning and retirement saving must start early (preferably when people reach their early 20s) in the lives of those who are a part of that society.
The end of 2017 brought significant changes to the tax code as a result of the recent tax reform bill passed by Congress and signed by President Trump. How exactly those changes will affect the economy remains to be seen, but what is known is that it will have an impact on individual taxes. As with any significant tax code changes, you should take the time to understand how those changes may affect your retirement and estate planning strategies and plans. The most recent reforms widened the gap between state and federal taxes, which could have a huge impact on how much retirement money you may need to meet your current plans. Furthermore, there could be changes coming to Social Security, Medicaid, and Medicare in the coming years as a result of the legislation, which may impact how people plan to fund retirement. Now, especially around the beginning of the new year, is a good time to review your retirement plans and educate yourself on how the new tax reform will impact your retirement plans and whether you may need to change your strategies and goals.