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Baby Boomers

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Baby BoomersEvery generation has a name coined after them and one of the most commonly heard is Baby Boomers. While we all know that the current generation of working-class adults is millennial, not very many really understand who the baby boomers are. In this baby boomer guide, we will explain it in an easy way to understand and remember.

What is a Baby Boomer?

In short, anyone who was born between the years of 1946 and 1964 is technically considered a baby boomer. Of all the people in the world, baby boomers make up the highest percentage. Depending on each country, the percentage may be higher or lower, however, developed nations contain the highest concentration of baby boomers. Until the millennial generation overtook baby boomers by a very small margin, they were the largest generational group in the history of America. Even today, baby boomers make up the bulk of the spending public and a large portion of the workforce. Because baby boomers have such a high impact on the world’s economy, they tend to be the target of most business plans and marketing campaigns. This year marks the advancement of many of the world’s baby boomers entering into the retirement phase of their lives.

How Did the Term Baby Boomers Emerge?

At the end of World War II, birth rates all over the world increased dramatically. The new crop of babies born following the immediate years after the end of the war is referred to as baby boomers. In the US, there were over 76 million babies born during the “baby boomer” time and this accounts for over 40% of the population in the US. Several factors played a role in the creation of the baby boom of the mid-1900s. Some of it was couples rushing to have families who previously chose to wait due to the great depression and the war. Another aspect was the feeling of upcoming prosperity that settled on the population due to the increase in wages and stable business in the 1950s. Of course, easy access to quality products and services encouraged more families to take the plunge and grow their numbers.

Another boost during those years that contributed to the increase in births was due to the G.I. Bill. This allowed military members returning from the war to purchase homes in the suburbs at a much more affordable rate than what they would usually pay. This encouraged families to expand, with the mother staying home to care for the children while the father remained as the main provider.

Why Are Baby Boomers Important?

Every generation is important and offers unique additions to humanity. Baby boomers are at the front of the longevity economy and are also currently the longest living generation in the world’s history. Baby boomers are still in the workforce, generating income and enjoying the taxes of the later generations in the form of their Social Security dividends. On a yearly basis, baby boomers account for seven trillion dollars in world spending. These funds are mainly spent on services, consumer goods, and healthcare. With the youngest baby boomers reaching their late 50’s by the end of this year, they still hold 80% of the world's net worth. This translates to a firm hold on both economic, political and corporate power.

Baby Boomers, Retirement & The Future

The earliest baby boomers started retiring in 2012. Even with the increased retirement age, many of those still chose to work for several more years or to work part-time as opposed to full retirement. There is a big difference between how baby boomers spend their retirement as compared to the generation who preceded them.

Baby boomers will face a much longer retirement than their parents. Following WW2, there was an abundance of jobs that made it easy for many baby boomers to find lucrative work. That work will last them until they retire at the official age of 65. The previous generation often had to work much longer and for much smaller salaries. In addition to the availability of jobs, baby boomers also have a longer life expectancy thanks to the advancements in medicine, technology, and the overall general way of living. On average, baby boomers are living as much as 20 years longer than the previous generation, which translates to a long time lingering in their retirement phase.

What Do Baby Boomers Expect from Retirement and Beyond?

Baby boomers have been blessed with an abundance of energy and better health. In addition, they no longer have children in the home to care for. This is often paired with a higher amount of savings and the energy and willingness to spend it. Many baby boomers decide to travel after retirement or at least experience things they put off in favor of their careers. In the past, retirement meant settling down at home for a few years and then perhaps moving into a nursing home. With baby boomers, retirement looks drastically different.

Moving into a retirement community or an assisted living home is no longer the first option. It is common for baby boomers to move to smaller cities and seek moderate employment to fill their time. Many also decide to go back to school or to finish their masters or Ph.D.’s! For those who prefer to stay in the middle of the hustle and bustle, staying in urban areas gives them ample access to cultural attractions, mass transportation, and advanced medical care.

A moderate portion of the baby boomer population chooses to retire abroad. Several countries have a lower cost of living but also offer quality healthcare and plenty of entertaining diversions. According to a recent report, approximately 45% of baby boomers don’t have money saved for retirement, which further increases the appeal of retiring in a lower-cost location.

Baby Boomer Savings & Pensions

The economy entered a golden age during the time most baby boomers were starting and or in the middle of their careers. While the previous generation often retired on the considerable pension offered by their employers, baby boomers often are not afforded the same opportunity. After the depression and the war, several large corporations merged into a single entity while others ceased to exist entirely. In addition, the number of people enrolled in various unions dropped dramatically by the time baby boomers started giving birth to millennials. Traditional pensions do exist, but overall, they are rare. The majority of baby boomers have their savings tied up in IRA’s, 401(k) plans and other investment strategies. While this is not a bad thing, it did place the responsibility of saving back in the hands of the person working. Unfortunately, because baby boomers were the first generation to face these changes, many of them failed to start putting away money for their retirement early on.

Many baby boomers always thought Social Security would be available as a fallback to help them navigate the bulk of their retirement. However, according to many recent reports, this government-funded pension will likely fall short. This is due to several reasons; the number of baby boomers is much larger than any other generation and the rate of inflation is faster than the rate of interest currently. Although the current working generation, the millennials, is much larger than the baby boomer population, their contributions are not enough to cover the longer lives of baby boomers.

Retirement Preparation for Baby Boomers

There are a lot of things baby boomers can do once they hit the age of retirement. Thanks to longer life spans and better healthcare, many choose to continue working in some capacity while others choose to travel. Eventually, thoughts of moving into a 55+ community, assisted living home, or nursing care will come up, just not as early as the previous generation. Regardless of what those plans may be, a few steps can be taken to help better prepare for retirement.

Delaying retirement is one of the first choices baby boomers make due to not having savings or simply not desiring to sit around doing nothing. It is common for people to work past the age of 65 these days with little or no change to their effectiveness. For some baby boomers, this will mean staying in their current position for a few more years while others may choose to find a part-time job or consultancy. Believe it or not, many baby boomers retire early and start their own businesses and run them for another decade or two before passing the reigns over to someone younger. Delaying total retirement helps to create a firm financial standing while also helping them to stay stable emotionally. 

It is important to make plans in advance for health concerns that will inevitably arise as the aging process progresses. Even with extended lifetimes and better healthcare, there is no cure for getting older. Baby boomers are often plagued with health issues such as high cholesterol, diabetes, obesity, and hypertension. Heart disease and cancer are on the rise in the population as a whole. Another concern is the prevalence of memory conditions such as dementia and Alzheimer’s disease, often requiring the help of a memory care facility. According to reports, one out of every six women and one out of every ten men will develop some form of memory condition as they age. While some baby boomers will have family who will care for them as their health fails, many will need to start planning for nursing care or assisted living in advance of their needs.

Healthcare & Long-Term Care for Baby Boomers

Healthcare is one of the most important things to think about when it comes to retirement and aging. Baby boomers are just now reaching the age when many medical conditions start to make themselves known. While remaining a part of the workforce, many baby boomers will enjoy medical coverage provided by their employer. Once they leave their positions, they may have to seek out their own private insurance plan.

In addition to insurance, it is important to have a legal document such as a living will that details their medical wishes regarding life support and continuing care. As a population, as many as 70% of adults have no form of a will drawn up, living or otherwise. As many as 30% of baby boomers also have no form of a will or advanced directive laid out, which can further complicate medical decisions if they are no longer able to articulate their desires.

The oldest baby boomers are currently in their ’70s, and the youngest are just hitting retirement age. For those that have not made plans for their healthcare or their long-term care, now is a perfect time. In addition to making choice about their health, medical treatment, and long-term living arrangements it’s also wise to look into long term care health insurance. This will set the groundwork that will be needed to pay for nursing care, assisted living, and other medical care costs as they age. The earlier baby boomers initiate these plans, the more affordable the facilities will be.

Planning for Long Term Care

Now is the best time to make a living will and a regular will. Although baby boomers will still remain a part of the workforce in the coming years, it would be foolish not to plan ahead. Just as the boom in births occurred within the same time frame, so will the demand for healthcare services and spots in long-term care facilities. The increased demand for senior healthcare services, assisted living spaces, and skilled nursing care will typically also cause the rates to increase. Though there are more millennials in the workplace than baby boomers, there will still be a shortage when the bulk of the baby boomer population will need specialized care.

Setting aside money for healthcare and senior living arrangements will ensure that when the time comes, you are prepared. Here at Senior Guidance we offer a wide range of planning resources and tips to help baby boomers navigate their retirement. Be sure to check out our other blog posts and guides for more information.

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