Retirement planning for baby boomers

An article in the Sunday Telegraph questioned whether baby boomers, now in their fifties, are well prepared for retirement in ten years time. The article also outlined positive steps that could be taken over the next ten year period to address the challenges they face. Research by US Metlife, suggests that in the UK, only one in four fifty-somethings is financially prepared for retirement and one third have no retirement savings at all.

Pension planning for those in their fifties has become more important because improvements in health and life expectancy, now mean that men retiring at 65 can expect to live to 82, and women of the same age can expect to celebrate their 85th birthday. In addition, many have seen pensions cut and savings squeezed in a changed financial climate. Financial security in retirement from a decent return from nest egg interest and a comfortable pension is no longer a foregone conclusion and it is now time to take steps to get financial plans back on track and in better order.

The Metlife research also found that whilst 60% of fifty year-olds surveyed said that their pension plans had been adversely affected by the recent financial crisis, a similar percentage said they had taken no action to change their investment strategy, alter their retirement plans or protect their pension funds.

The plan for the ten year countdown to retirement for the baby boomers, has actions at the start, after five years and with six months to go to retirement. The actions in the article are supported by advice from financial observers and people in the pensions industry and all encourage people not to delay but to start now and gain maximum time to get the best possible outcomes.

Here is a brief outline of the key actions.

At the ten year start point:

  • find out what you are worth; including pension entitlements and forecasts and try to estimate realistically how much money you think you will need in retirement. Seek advice on how to bridge the gap
  • review your savings and investment strategy; seek advice about costs and risks and make changes where appropriate

After five years:

  • review retirement goals
  • take safer investment options to avoid short term risk
  • maximise savings – prioritise for a push to build your nest egg
  • re-visit or find any ‘lost’ pensions or investments
  • consider your retirement plan and start looking to find best retirement funding options e.g., annuities to best suit your requirements.

Six months to go:

  • seek annuity advice
  • consider deferring retirement
  • contact pension providers

This plan is not inflexible and is adaptable to your circumstances, but the key message is do not delay, start now!