When you think of retirement, what do you see? Sandy beaches, afternoon golf games ... a life of leisure? Well, for many baby boomers, retirement may be just a pipe dream as they face mounting debt, lower-than-expected retirement funds and an insecure economy.
More than 3.6 million baby boomers reach full retirement age each year, but many will not be enjoying their twilight years due to the lack of retirement savings, escalating health care costs and mounting debt.
Jessica Cecere, president of the Palm Beach County and Treasure Coast Consumer Credit Counseling Services, says she's noticed a major increase in older clients seeking debt counseling.
"We're talking about a group of people that have additional expenses because they might have medical concerns or different circumstances. They might have put their money into an account that, you know, into a retirement account that did not perform very well. Or they might have had a complete crash in their retirement, so these folks are really suffering because they don't know what to do. They are financially challenged and they've never been there before."
According to the Center for Retirement Research, 52 percent of boomers born between 1948 and 1954 are at risk for being unable to maintain their standard of living in retirement. And it's only going to get worse. Sixty-four percent of boomers born between 1955 and 1964, and 71 percent of Gen X-ers born between 1965 and 1974, may be unable to retire comfortably in their lifetime. (Source: Center for Retirement Research, Boston College)
Greg McBride, CFA, senior financial analyst, Bankrate.com
"There is a wake-up call coming in terms of retirement security and that, I think it's going to come with the baby boomer generation. Because you know, a lot of their parents had pensions, had social security, had the type of benefits that may not be around 10, 20, 30 years from now. A lot of people who are retiring now or are going to retire over the next couple of decades, they're not going to have the pensions, they're not going to have, they may not have the benefits to the same extent as Social Security, Medicare and they don't have the savings that they accumulated."
So how can people avoid debt in retirement? First and foremost, you must start saving early. If works consistently set aside 6 percent of their paychecks with a 3 percent employer contribution, invest prudently and leave the money alone, they should have enough.
Greg McBride: "Using the power of compounding, time becomes your greatest ally, so you have to get yourself in the habit of saving for retirement and doing so early. Even if you're in your 20's, you're just out of school and you're in your first job with student loans, you still have to get in the habit of putting money away for retirement."
To find out how much you need to save for a secure retirement, Bankrate has a useful calculator that allows you to create your retirement plan, no matter your age.
Whether it's warm weather and sandy beaches or your own idea of life after work, the bottom line is that you can never save too much for your future. To learn more about retirement, visit the retirement page at Bankrate.com. I'm Doug Whiteman.