The earliest baby boomers have already turned 65 and over the next 20 years, they will be making one of the biggest transitions in life. The Boomers have made retirement a really hot topic these days. One of the common discussions in my retirement workshops is with people who are really concerned about retirement because they feel like they do not have enough for retirement. This is not an uncommon theme given some of the challenges boomers have faced with their retirement planning:
- Fewer Defined Benefit Pension Plans have made retirement less secure for many boomers
- Low interest rates have forced baby boomers to invest less in GICs and more in stocks and mutual funds. Many boomers feel they have to take more risks in their portfolios.
- volatile stock markets can create bad timing where portfolios have either been hit hard or just stagnant with all the ups and downs of the market.
- Many boomers are also hit by the debt crunch. Debt has become such a big part of our society and is one of the big reasons why people have not saved enough money for retirement. The debt statistics are scary.
And for some people, this retirement anxiety comes from a lack of planning. I am continuously amazed at the number of people who spend little to no time watching their money. Whether you are 25 years from retirement or 5 years to retirement, you have to run some numbers. You have to plan for the future. You have to get your head out of the sand and take responsibility.
What can people do if they do not have enough saved for retirement?
Over the years, I have met with a lot of Canadians concerned about how much money they need for retirement. Here's a few ideas on how to deal with being around your 50's and not feeling like you having enough money?
1. Get a plan
I know you've heard this before but how can you make proper decisions without a retirement plan? Check out two of my videos on YouTube on retirement planning: Retirement planning is like sorting out a jigsaw puzzle and What is a retirement plan?
I believe it's never too late to start planning. Planning helps you to envision and see a future. For some, it confirms that there is a shortfall of cash at the end of the path. However, I've helped many people over the years with their retirement plans and in doing so, they realize they are closer to having enough than they thought. There's no question that the sooner you plan, the better. For many baby boomers, they still have more time than they think.
2. Revise your retirement date
Let's face it – most people want to retire sooner than later. But how much of this is because society says early retirement is better. Most of us bought into the concept of Freedom 55 (which was just an advertising campaign). From my experience and perspective. early retirement is only good if you know what you are going to do with your time and money. I've seen many people retire early (with enough money) only to find they are bored and have nothing to do. I've seen so many people retire and go back to work, not just for the money but for something to do with their time. If this is reality, then working a little longer might not be such a bad idea. I've always said early retirement works if you have something to retire to. Most people who retire early retire because of what they are retiring from (they hate their job, they hate their boss, they hate their life). We all retire from something but ultimate success comes in figuring what you are going to retire to. Until then, keep working.
Related article: Who says you need to stop working in retirement?
3. Plan for a Phased retirement
As I see it, this is really the new retirement. Retirement is no longer about going from working 5 days a week to 0 days a week. More and more people are going from 5 days a week to 3 days to 1 day to nothing. Or others are going from 12 months to 6 months of the year. And often the work they do is not with the same employer. The point is simple – working in retirement is becoming a bigger and bigger deal. Ask boomers if they plan to work in retirement and more than half think they will. Working in retirement not only helps the bank account but it also helps the mind, body and spirit especially if you are doing something you enjoy.
Related article: 5 New retirement trends
4. Focus on your cashflow
There's a reason some boomers have not saved money. They spend everything they make and more. True financial success comes in living within your means but how can you do that if you have no idea how much you are spending? How can you possible know how much to save for retirement if you have no idea what you spend day to day, month to month or year to year. The most financially successful people know how much they are spending. If you are overspending then you need to start budgeting for the future and ensure that habit does not continue. The sooner you start living below your means, the more ready you will be for retirement.
Related article: Do you know how much you are spending?
5. Find the right job
Work is often one of the biggest parts of our lives. Most people spend more time working than anything else. As I said earlier many people who strive to retire sooner than later, it's because they do not love their work. I know lots of people that love their work and as a result do not have this overwhelming urge to retire. If you love what you do, then it may not feel like work. If this is the case, then maybe it's time to take a look at the next 10 to 15 years and determine how to make work more enjoyable whether that means a change of roles with the same employer, a change of employers or just some perspective that you've got it better than most where you are.
Related article: The importance of earning money
One more thought
Notice in my list I have not come up with what most people think is the obvious answer and that is save more money. Don't get me wrong, I think saving money is important but when time is not on your side the math can get really depressing and counter productive. Retirement is more about life than money. Money is important but remember that retirement is a life within a life. Get your life in order now and it will only help you in your future retirement.