The Baby Boomer generation has made a profound impact on the future of retirement planning. Here’s how you can best prepare right now, no matter what age or stage of retirement you’re in.

As dedicated financial advisors at CKS Summit Group, we have enjoyed assisting many clients in the boomer age group in transitioning into their golden years. In this blog, we’ll discuss the key developments during this transition, and what to expect every step of the way.

Baby Boomers and Retirement

Boomers make up nearly ⅓ of the total United States population, and in 1964 they made up 40% of the population, making them one of the largest living adult generations, second to millennials. 10,000 Baby Boomers reach retirement age every day, meaning radical changes to the job market have already begun and will continue to change as time goes on.

A general rule of thumb, is that retirees should have saved around 80% of their pre-retirement income to avoid any major lifestyle changes. Unfortunately, Social Security benefits generally only amount to half of that for average earners. Since Boomers collectively have saved less for retirement, as more and more of the generation exits the workforce, there will likely be a decrease in consumer spending, affecting the US gross domestic product (GDP). This can hit the economy and hinder growth and overall economic health.

The best thing for boomers and non-boomers alike to do is to stick to the personal finance principles that have proven timeless: Save money, invest in a diversified and low-cost portfolio and prepare for any possibility. To get there, you must understand the stages of retirement planning and how you should be financially preparing at each phase.

The Three Stages of Retirement

As we’ve observed and worked with many soon-to-be and already-retired individuals, we have noticed a pattern of three distinct phases that many retirees go through. Understanding these stages can help Baby Boomers (those born between 1946 and 1964) better prepare for what’s ahead and enjoy a fulfilling, financially secure retirement.

The Active Stage: Typically, this stage kicks off immediately after retirement. Baby boomers often plan many activities they need more time for during their working years. Travel, pursuing hobbies, and spending more time with family and friends are every day during this phase. It is generally the most expensive retirement stage due to increased leisure activities and the desire to make the most of newfound freedom.

The Slowing Down Stage: As time progresses, the pace slows down. Typically, this happens a decade or so into retirement. Spending might decrease as less time is devoted to travel and more active pursuits. Instead, there may be a shift toward quieter, more inexpensive activities like reading, gardening, or attending local events.

The Sedentary Stage: Usually, this stage occurs in the later years of retirement. Spending decreases further, primarily because of physical constraints and a reduced interest or ability to remain active. However, healthcare costs might increase significantly during this stage, offsetting the reduced fees in other areas.

How to Prepare

As you can see, retirement spending can dramatically alter as you progress though your golden years, yet only half of Americans have calculated how much they need to save for retirement.

Making sure you have enough money to last is paramount. If you are a Baby Boomer and unsure of where to start, here are our top 5 tips to starting off on the right foot:

•  Start Saving ASAP: Once you know what you want to be doing in retirement, it’s time to figure out how much you need to do it. Run some numbers using online calculators and financial professionals to conduct a robust savings plan to meet your anticipated needs.
• Focus on Your Income Sources: While building cash savings is important, it’s just one piece of the retirement puzzle. Create a diversified retirement income strategy including savings, investment returns, Social Security benefits, pensions, and other income streams.
• Use a Trusted Financial Advisor: Consult with a financial professional who can assess your current financial situation, keep you on track with realistic goals, and support your existing retirement roadmap.
• Prepare for the Unexpected: Divorce, healthcare and inflation are just some of the events that can drain your savings. Remember to build your emergency fund and explore insurance options.
• Don’t Forget Your Estate Plan: Baby Boomers in the United States hold approximately 50% of the country’s wealth as of 2023. Having both a proper estate plan and life insurance coverage ensures that your assets are distributed in a manner of your choosing and that your loved ones will not experience financial hardship following your death. A carefully outlined plan also aids in avoiding an expensive and often lengthy probate process.

Final Thoughts

National Baby Boomer Recognition Day is the perfect time to revisit your retirement strategy and place an emphasis on the importance of financial planning for your retirement journey. Whether you’re about to retire, just retired, or are well into retirement, there is always time and time to take steps toward securing your financial future.

At CKS Summit Group, we are ready to guide you through every stage of your retirement journey. Our goal is to provide you with financial peace of mind so that you can focus on making the most of this exciting new chapter in your life. We believe in preparing for every financial situation, leaving no stone unturned.

Contact us today to schedule a consultation and learn more about how we can help.