It’s often assumed that Baby Boomers have their finances sorted out, but that’s not always the case. The reality is the world has changed significantly over their lifetime. Baby Boomers are people born between 1946 and 1964. This group has witnessed several shifts in the economy, culture, and technology, including the debut of color TV, the first Polaroid camera, and the rise of rock 'n' roll through legends like Elvis Presley. With many Boomers in or approaching retirement, it’s the perfect time to focus on financial responsibility. Elements is here to discuss the common Baby Boomer approach to money and how they can make the most out of their retirement funds.

How do Baby Boomers Approach Money?

Baby Boomers have been recognized as one of the wealthiest generations. Data from the Federal Reserve shows that Boomers have accumulated more than half of the U.S. net wealth, worth $76 trillion; however, this wealth didn’t come overnight. Their knowledge of finances is shaped by their upbringing and decades of experience in the workforce. Before digital tools were accessible, managing money involved spreadsheets and only in-person meetings with financial advisors.

Today, technology offers numerous ways to track expenses, set goals, and monitor spending. With both tangible resources and online tools, Boomers have a variety of options for handling their finances. Additionally, Baby Boomers had relatively successful working years in the post-WWII economy, compared to Millennials and Gen Z, who have faced significant economic challenges such as the 2008 Financial Crisis and the COVID-19 Pandemic.

Boomers have always valued stability and predictability, especially after navigating post-war shortages. With these past challenges, many have focused on working hard and saving diligently.As retirement approaches, more Boomers are relying on banking to secure their financial future. If you’re a Boomer or know someone from this generation, consider these tips for managing your money during retirement and how to invest wisely.

Financial Planning in Retirement

Are you retired or getting ready to enjoy retirement? You might be thinking about the best way to manage your benefits during this new chapter. As you transition, you may notice a big change in your finances, and with multiple checks coming in each month, it can be challenging to allocate your earnings. While most benefits like social security can last a lifetime, without adequate planning, it is possible to run out of retirement income sooner than you might expect. But no need to stress! Here are a few tips to help you make the most out of your retirement funds:

• Create a Realistic Budget: Estimate your potential monthly earnings and create a spending plan that fits your lifestyle. A good rule of thumb is to have 25 times your planned annual expenses by the time you retire. Determine how much you want to live with annually, subtract any benefits you’ll receive, and multiply that number by 25 to get the amount that you need to save. 
• Plan for Healthcare Expenses: Your health becomes more of a priority as you age. It’s wise to consider long-term medical needs during retirement, especially with the steadily increasing costs. Fidelity estimated that the average 65-year-old may need $165,000 in after-tax savings to cover healthcare expenses in 2024, which is nearly 5% higher than the previous year. While this amount will vary depending on the individual, it may be a good idea to enroll in and contribute to a Health Savings Account (HSA) to have extra funds set aside.
• Review and Readjust: Prices are increasing, and these fluctuations will require you to reassess your finances. This involves closely examining your budget and spending habits to maintain a financial plan that aligns with your goals, no matter how the market shifts.
• Speak with a Professional Advisor: You don’t have to navigate your future on your own. A financial advisor can provide you with the support and assurance you need to work toward your goals.

How to Keep Earning

Many generations are told to save and invest for the future, but saving money shouldn’t stop at retirement. While benefits such as 401(k) and social security are paid out monthly during retirement, there are other retirement and investment accounts that retirees should consider to keep growing their wealth. These accounts include:

• Health Savings Account (HSA): These special accounts help you save for future medical expenses on a tax-free basis with dividend rates that increase over time.
• Certificates: Certificates typically offer higher rates than regular savings accounts and are great for individuals who are looking to save consistently for long-term goals without interruption.
• Traditional and Roth IRAs: You can choose between tax-deductible contributions with a Traditional IRA or enjoy tax-free withdrawals with a Roth IRA. Both accounts can help your savings grow or compound more efficiently over time. Please note: Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.

Everyone's financial situation is different, and each retirement plan will vary based on your circumstances. Retirement is a time for you to unwind and focus on the things that matter most to you. Whether you're retired or not, crafting an investment plan now can free up more time for you to enjoy life beyond work.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. 

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