Don't expect to rely on the government or your employer as you plan for your retirement years. It is best to proceed as if you are on your own as governments and companies around the world shift risk to individuals. "Self-reliance is becoming the order of the day," says University of Illinois economist Jeffrey Brown.
Millions of Baby Boomers are financially unprepared as they approach traditional retirement age. A staggering half of households headed by 50-to-59-year-olds have $10,000 or less in their 401k accounts.
Relying solely on Social Security, Medicare and a company pension for retirement security is risky at best. The smarter, safer approach is to plan for a future wherein retirees work longer, pay more for medical and long-term care and receive lower Social Security and pension payments than previous generations did. Employee Benefit Research Institute, figures typical 65-year-olds will spend more than $100,000 over the rest of their lives for out-of-pocket medical costs. Long-term care can add $50,000 annually.
With kids gone, second careers starting, and divorces common, boomers are open to new experiences.
The good news is boomers' collective wallet will only get fatter as they continue working. They're likely to be vigorous consumers as they empty the nest, take on new jobs, relocate, go back to school, start a second or third career, remarry, inherit money from their savings-minded parents and pursue new hobbies. People now in their 50s may well work longer than any previous generation, with more than 60% of men age 60-64 expected to be in the workforce in 2012.
Today's 50-plus crowd is far more likely to see the two or three decades ahead as a second life. By associating the empty nest with a promising stage of life, they expect to have time to talk with their spouse more, fewer things to argue about, and they won't have to have sex only in the middle of the night.
Sources: BusinessWeek, July 25, 2005 and October 24, 2005