by Jeremy Koch

photo by rudyanderson

Baby boomers have redefined every life stage they have passed through, and retirement will be no different

[From US News & World Report]

Baby boomers have redefined every life stage they have passed through, and retirement will be no different.  According to this report in US News, there are ten important differences between boomer retirement and retirement for earlier generations:

Longer life

Because of increased life expectancy, boomers will spend more years in retirement than previous generations.  Some boomers will actually spend more time in retirement than they did working.

Lack of pension

The traditional pension is a thing of the past for many boomers.  In 2006, only 17% of people retiring had traditional pensions, down from 40% in 1975.

Need to actively manage investments

Because most boomers will rely on their own 401(k) funds for retirement income, they will have to actively manage their retirement nest eggs, making critical decisions about asset allocation and risk throughout their lives.

Dealing with required minimum distributions 

Retirees are required to withdraw a proscribed amount of money from their tax-deferred accounts starting at age 70 ½ and pay ordinary income tax on the amount they withdraw.  If they fail to do this according to the proper formula, penalties can be significant. 

Continued work in retirement 

Out of necessity or choice, many Americans will continue to work in retirement.  This will lead many to explore alternative careers or to give back to their communities. Many will choose to retrain for second careers that could last a decade or more.

Active lifestyles 

Many baby boomers see retirement as an opportunity to pursue adventurous life experiences that they didn’t have time for earlier in life. 

Dealing with being in the “sandwich” generation

Boomers will have to balance caring for aging parents, helping adult children, and taking care of their own needs.

Reduced Social Security benefits

The value of Social Security benefits will be lower for boomers than for earlier generations due to the changing formula for retirement age and benefits.

Retiring with debt 

Significantly more boomers are retiring while still owing money on their homes or credit cards that was the case in previous generations.

Diverse retirement locales 

Boomers will not flock to traditional retirement communities the way earlier generations have, but will instead seek out locations with more diverse populations.