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Boomers Reach Retirement
Courtesy Resource Bank, Northshore LIVING WELL Magazine
Everyone has heard of the Baby Boomers. But do you know who they really are? The U.S. Census Bureau defines this group as those born between 1946 and 1964. Currently the Boomers represent 26% of the total U.S. population. The year 2011 marks the first year that members of the baby-boom generation celebrate their 65th birthday. In fact, each day over the next 19 years, an estimated 10,000 Baby Boomers will turn age 65. As much of the population celebrates the milestone of reaching median retirement age, the demographics of the country began to change. Currently, 13% of Americans are ages 65 and older. By 2030, when all members of the baby- boom generation have reached 65, the Pew Research Center projects that 18% of the nation will be at least retirement age – a 38.5% increase in just 19 years.
Historically, the age of retirement has fallen between the ages of 62 and 70. Trends show that many are choosing to stay in the workforce longer as the age of retirement becomes a moving target. This doesn’t mean planning for retirement needs to be a moving target as well. It is as important as ever to have a diverse, well-managed approach to saving for a worry-free future.
The table below defines some current savings and investment options. Based on the data available from the 2010 Census, we can easily see that this will be the biggest wave of retirees that we have ever seen. This will not only affect the markets, but also all of our government sponsored plans such as Medicare, Medicaid, Social Security, etc. Because typical retirement investments are tied to current markets, we have seen that they have a higher risk of going down.
Boomers are becoming more protective of their savings and are ready for options that offer more predictable ways to protect their investment yet earn additional income. Many are going to sound financial institutions, such as Resource Bank, to utilize certificates of deposits (CDs), money markets and savings accounts. There are a variety of low risk options within banks. While growth may be slower on these accounts, relying on predictable rates and security of funds is quickly becoming a front runner in retirement planning.
Regardless of the trends of thought, the reported projections, and the ever changing economy, the best route to retirement can be summed up in one word: diversify. Set your goals, regularly review your options, and talk to a trusted and knowledgeable source. Know that it is never too early or too late to work towards reaching your retirement goals.
Tax-Advantaged Investments
| Name | Description |
| 401(k) | A 401(k) plan is a type of tax-qualified plan established by employers to which eligible employees may make salary deferral (salary reduction) contributions on a post-tax and/or pretax basis. Contributions and distributions subject to IRS regulations apply including contribution limits and restrictions on how and when withdrawals can be made. |
| Traditional and Roth IRAs | Traditional and Roth IRAs are established by individual taxpayers. Contributions to the Traditional IRA may be tax deductible depending on the taxpayer’s income, tax filing status and coverage by an employer-sponsored retirement plan. Roth IRA contributions are not tax-deductible but grow tax-deferred. |
| SEP IRAs and SIMPLE IRAs | Simplified employee pension (SEP) and SIMPLE IRAs are plans established by employers. Typically do not have start-up or operating costs. SEP IRAs are available to any size business; SIMPLE IRAs are designed for smaller businesses (generally 100 employees or less). |
| Annuities | Annuities accept and grow funds from an individual and then pay out a stream of fixed periodic or variable payments to the contributing individual at a later point in time. |
Fully Taxed Investments
| Name | Description |
| Stocks | Stocks represent ownership in a company so your profit is based on how well the company does. Stocks have a high rate of fluctuation (risk) but are meant to provide long-term growth as the company increases in value. |
| Bonds | Bonds are loans to governments, corporations and agencies. Purchasing a bond should yield two outcomes: (1) your money returned and (2) interest received to reimburse you for not being able to use that money. |
| Mutual Funds | Mutual Funds are made up of a group of funds collected from many parties for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds help to create a better diversified portfolio and are managed by a professional or indexed to match market’s performance. |
Resource Bank may be reached at 985-801-1888 or online at www.BankOnResource.com.
