We are about to witness an explosion of retiring Baby Boomers and this is going to happen sometime pretty soon. It is not a smart economic commentary on the times we live in that most of these Baby Boomers are unprepared for their retirement. Men are faring just a little better than women and this can be put down to women’s higher life expectancy in particular.
Indiscretions of the Baby Boomer generation
The present generation is shying away from the retirement indiscretions committed by the Baby Boomer generation, but they are not preparing perfectly either. Let us see how they can act more prudently in the year 2015 and give themselves a better shot at a decent post-retirement nest egg.
The first and perhaps the most crucial aspect in question is portfolio diversification. Banking entirely on property or shares or bonds or collectibles won’t help. The present generation will have to figure out how best to diversify earnings and asset procurement and conduct risk-benefit analysis for the short and the long term.
Tackling debt propensity
There is something inherent in humans that give them a propensity towards debt. The problem only got compounded when we landed on the plastic money turf. We have our mortgages, our credit card debts, our various overdrafts and loans to handle. It is important to ensure that we consolidate our debts, put them under a single umbrella, and negotiate our way valiantly through them. Ideally, we should be in a position to cut out all debts prior to the time we hang our boots.
Any retirement planning effort should include and encourage voluntary excess contributions to the Superannuation fund. By the year 2020, we will be looking at 12% compulsory Super but at least our generation won’t need time figuring out that this is not going to be enough. It then falls on us, either through salary sacrifice or through excess contribution to make our Super fund count.
Retirement is not a day held in unforeseeable time. It will dawn on us someday. It is for us to make that episode of our lives free of financial hassle.