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Tuesday, July 29, 2008 

Can We Learn from the Baby Boomers?

The baby boomer generation has already turned 60 (at least the oldest of them) and is undoubtedly pondering their upcoming retirement.

Are they ready?

According to a 2006 study conducted by the Center for Retirement Research at Boston University, many are not.

The study shows that median assets in retirement plans-including 401k's and IRA's-are just $60,000 for workers in their 50's. While this is not an average, this figure clearly suggests that quite a few baby boomers might be unprepared to meet their retirement needs.

Most financial planners say that retirees should withdrawal no more than 4% to 5% from their nest egg each year to try and make their money last. At $60,000 this allows for about $3,000 each year in withdrawals (not counting earnings). That isn't even enough for play money.

What Happened to my Social Security and Pension Benefits?

While retirees can claim partial Social Security benefits at age 62, most baby boomers will have to wait until 66 or 67 before they can claim full benefits, not 65 as it used to be. Yet another bump in the rocky road to retirement.

Of course, there may be many baby boomers that are lucky enough to have a pension benefit waiting for them when they retire. But many more have experienced the disappointment of seeing their employer scrap their defined benefit pension plans in favor of the more common defined contribution style of a Profit Sharing or 401k plan. This move may have cost those relying on this benefit dearly.

What's a Boomer to Do?

Fortunately, not all is lost. But the obvious needs to be said: If retirement savings is lacking, people will need to work longer than they expected before they decide to hang up the suit and tie.

Here's an interesting fact from the same report by the Center for Retirement Research: For every year a worker delays retirement and continues to save and invest, monthly benefits increase by 7 - 8%.

Delaying retirement for 2 years? Go ahead and tack on an additional 15% in monthly benefits.

What about 4 years? Watch your potential benefits increase by one-third! You get the idea.

Looking Ahead

There is simply no replacement for disciplined saving and investing, and it's never too late to start. If you're young, start now-you'll be way ahead of the game.

If you're not as young and you feel you're behind, take heart. Revamp your budget to remove frivolous items and focus on packing away as much as possible into your retirement plans. It's a good idea to consult with a fee-based financial planner to discuss your situation. They will create investment programs tailored to your needs and will help put you on the right track.

Many baby boomers will have to modify their retirement goals and expectations to bring them down to more realistic levels. The younger generations should use this opportunity to learn and to take the time to consider where their own retirement is headed.

For more information on retirement plans, visit http://www.guide-to-retirement-plans.com

http://www.Guide-to-Retirement-Plans.com aims to arm retirement plan investors with the knowledge needed to understand retirement plans, pick the ones suitable for them, and save and invest properly to ensure a fulfilling retirement.

This April 1988 picture shows Ronald A. Gray in handcuffs and chains, escorted by military police leaving a Fort Bragg, N.C. courtroom. President Bush on Monday, July 28, 2008 approved the execution of the Army private, the first time in over a half-century that a president has affirmed a death sentence for a member of the U.S. military. Gray was assigned to the 82nd Airborne Division at Fort Bragg. (AP Photo/The Fayetteville Observer, Marcus Castro)AP - President Bush could have commuted the death sentence of Ronald A. Gray, a former Army cook convicted of multiple rapes and murders.

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