What Every Baby Boomer Needs to Know About Retirement Today: The “New Normal”

Imagine living in a world of “what ifs.” What if I married someone different? What if I didn’t have kids? What if I did have kids? What if I was raised in a different country? What if I went to college in a different city? You can ask yourself these questions all day. But, at the end of the day, they are just “what if” questions to which you will never truly have an answer.

There is, however, one “what if” question to which you can control the answer. This is perhaps the of the most important “what if” questions anyone who is retiring will ask themselves…

What if I don’t have the income I need in retirement

to last the rest of my family’s and my life?

This is the #1 concern retirees face: running out of money in retirement, and it’s an understandable fear. When you are used to working and getting that guaranteed paycheck, it may be difficult let go of that, regardless of how much money you’ve saved.

Well, what if you could take all of that money you’ve saved and turn it into a guaranteed paycheck? What if you could live out your retirement years never having to worry about receiving a guaranteed income stream month in and month out?

Keep reading… We’ll get there…

There are so many uncertainties in life and things we can’t control. But something we can control is our retirement and the income we receive during it.There are, however, many factors we need to consider when customizing a plan for you to generate the lifetime income you need.

All of these “factors” fall under the “New Normal.”

The fact of the matter is…

The earliest of the boom generation are turning 65 at a rate of 10,000 per day. In other words, there are approximately 10,000 baby boomers retiring EVERY SINGLE DAY, and it will continue like that for a while.

In his research paper entitled, “Why Are So Many Baby Boomers Ill Prepared for Retirement?” Phillip Longman makes the point that, while boomers were great at inventing rock and roll and landing a man on the moon, the generation that gave us consumer credit and the two-car garage wasn’t so good at preparing for their golden years. While boomers earned more at every age of life than any other generation in history, they weren’t so good at saving it.

The parents of boom children knew all about hard times. They were children of the Great Depression of the 1930s. But boomers were blessed with a cornucopia of plenty. Consumer credit made it easy to obtain new automobiles, nice homes with color televisions in each room, and push-button gadgets that would have awed their grandparents.

On top of that, the 20-year rise in the stock market during the 80’s and 90’s has caused these Baby Boomers, who are today’s retirees, to have the mentality that a rising stock market is “normal.” I wish I could tell you it is normal, but it isn’t (as we have unfortunately witnessed in recent years).

What does that mean for you?

In short, all of those people who were fueling the stock market back in the 80’s and 90’s are now pulling that money out to fuel their own retirement. Again, I want to stress, that is approximately 10,000 people a day! Because of this, retirees today need to plan for what many are calling the “new normal.”

What is this “new normal”? Let’s start with Bill Gross’s definition of it, seeing as he is the one who coined the term (along with Mohamed El-Erian from Pimco). The Forbes article, “Bill Gross: You Don’t Get The New Normal,” states,

“Though many people use the words, few people understand the idea, Gross complains. Commentators and investors alike seem to think that markets will soon return to the way they were before the financial crisis, a new version of the good old (normal) days… In Gross’s July investment outlook he writes that investors have yet to accept the prospect of ‘half-size economic growth induced by deleveraging, regulation, and deglobalization.’ The decades of fueling spending and growth with debt are over. People, companies and countries shedding their debts leads to years of slow economic growth and meager returns on investments.” http://www.forbes.com/2010/06/30/bill-gross-new-normal-markets-bonds-equities.html

Gross defines this “new normal” as “slow growth in the developed world, insufficiently high levels of consumption in the emerging world and seemingly inexplicable low total returns on investment portfolios– bonds and stocks– lie ahead.”

In other words, we’re facing slower growth, thinner margins, and lower returns on investments than we have in the past.

That is our current reality and the “new normal” today’s retirees are facing.

You need to plan your retirement around this “new normal.” That begins with education. When it comes to the retirement sector of finance, the rules and regulations are constantly changing and you have to keep up. On top of that, there have been many new developments of income products that you’ll want to know about.

Talk to a retirement income specialist about the latest strategies in customizing a retirement income plan specifically for you.

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