Overcome retirement’s harsher realities

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Get ready for the silver tsunami. Retirement realities are about to change in America, big time.

Those in the baby boomer generation, who have been reinventing American society for more than six decades, start turning 65 this year. That means a rapidly rising number of retirees for the next 18 years or so, and a record number of opportunities — and challenges — to making the post-career phase of life rewarding, not to mention affordable.

Consider that, for the foreseeable future, the number of Americans turning 65 will be roughly 10,000 per day. They’ll be more active, healthier and long-living than previous generations of Americans.

And therein lies the problem. The boomers’ parents typically retired with a pension. But pensions have been declining in popularity for a couple of decades. Some of those that remain, such as pensions covering public employees, are in woeful financial shape and may have to be scaled back.

Those who planned ahead may have socked money away in defined-contribution retirement funds such as a 401(k). But whether there’s enough to fund retirement for 74 million people is debatable. Nearly three out of 10 Americans (27 percent) have less than $1,000 saved up, according to the 2010 Retirement Confidence Survey, sponsored by the Employee Benefit Research Institute. More than half of Americans (54 percent) report having savings and investments totaling less than $25,000.

According to the EBRI’s 2009 Retirement Confidence Survey, 54 percent of boomers between 45 and 54 years of age have less than $50,000 saved up, and 49 percent of those aged 55 and older are in the same boat.

And in an era of near-zero interest rates on savings instruments like CDs, with stock markets still well below their pre-recession peaks, it’s clear that, for this generation, retirement realities will include dealing with more personal financial issues than even the prudent may have anticipated.

Social Security benefits, meanwhile, haven’t had a cost-of-living boost in two years now. And those in the younger subset of baby boomers will have to wait longer than their older siblings to collect full benefits.

At the same time, the new retirees are from a generation that always placed a priority on self-realization. Everything from Earth Day to transcendental meditation classes reflect the ways baby boomers have a historic habit of exploring how to lead richer, fuller lives. There’s no reason to expect that to stop when their careers do.

Doing so will perhaps require boomers to plan, and adapt, more than their parents did. For a generation known for embracing change, the most challenging adjustment of all may ultimately prove to be mastering the new retirement realities.

In the months ahead, we’ll be adding to the Retirement Realities special feature. We’ll offer news and advice on the best way to plan for — and live well — in retirement, including investing, insurance, money management and lifestyle tips along with the tools and resources to help you every step of the way. We’ll also examine the portfolios of some retirees and pre-retirees, give them advice and follow their progress throughout the year.

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