Million Dollar Round Table (MDRT) has earmarked August 6
to 10 as Retirement Preparedness Week, and has coined the
word Boomertirement, to signal the looming crisis
in retirement that faces the US the Baby Boomers.
The Baby Boomers are those individuals in their late forties,
fifties and early sixties, who were the beneficiaries of
a favourable US economypost war and post recession,
who had the greatest opportunities to accumulate wealth
off plans such as mutual funds and the stock market.
But the experts at MDRT are now seeing that poor planning
and a credit driven life style have created what could be
a major crisis for retiring persons. In addition, health
sector ills and social security shortcomings also threaten
to augment the crisis.
MDRT held a Boomertirement Industry Summit in April this
year and uncovered several recommendations, which it has
rolled out to some 35, 000 of its members across the globe,
for use in assisting local communities and populations.
The fact of the matter is that the majority of retirees
are going to have less retirement income than they will
need when they quit work. The challenges stem from: greater
life expectancypeople are just living longer and modern
medicine is keeping sick people alive longer. Other factors
are: decreased rates of personal savings, potential shortfalls
of government pension programmes, and simply because a number
of pension plans are being wound up or terminated.
Recognising the challenges, the prospective retiree will
have to make three decisions:
1 What lifestyle he/she will want;
2 How much income will be needed monthly;
3 How much he will need to set aside for a lifeboat.
The critical understanding is that to take any action at
present, is bound to be better than taking none.
Accumulating a significant amount of assets in cash, real
estate, stocks, etc is only half the solution. The second
half of the solution has to do with sustainabilitywill
the wealth you accumulate have the buying power in the future.
The major points are longevity, inflation and falling investment
Some ways to counteract these challenges are: prepare to
continue working after the traditional age of retirement,
set up automatic deductions from payroll to limit your spending
and consumption, own a home from which you can leverage
The Boston Centre for Retirement Research in the US developed
a National Risk Index, which shows that 45 per cent of working
households will never be able to maintain their current
lifestyles in retirement.
One of the recommendations aimed at government is to increase
the incentives dramatically, to encourage workers to save
for themselves in tax free deferred annuity plans, provide
incentives for workers on contract to save immediately
and to redefine social security benefits.
In addition, employers may help by redefining the compulsory
The crisis threatens to be so great that experts are saying
that you simply cannot touch the money you must save. Further,
the money you save for retirement MUST guarantee income
for life. This means that you must save in a plan that will
guarantee you a cheque for as long as you live, never a
lumpsum in hand.
It is also significant that if you save in real estate,
or equity, the real value to you in retirement is in proportion
to the ease with which you can convert these assets to cash
at market value.