5 Money Management Tips for Baby Boomers
The term, Baby boomers often refer to people born between 1946 and 1964; products of the post world war II baby boom. The Baby Boomer generation make up a large chunk of the world population. They are the largest generational group in the USA and constitute roughly 22% of the population or 72 million people.
Thus the baby boomers have significant impact on the American economy and due their strong spending power, they are the focus of marketing campaigns.
However, the upcoming years are financially crucial for the generation. The growing cost of caring for multiple family members is eating into what should be your retirement funds. If you’re a little behind on your finances, you’re not alone.
Building investments, as well as creating your retirement savings, can be tougher these days. Now that baby boomers are either retiring or already there, properly managing your finances is a must if you want to keep a consistent cash flow.
Here are 5 money management tips that baby boomers can use to save more money. These can help give you a good way to reduce your financial strain.
#1. Hire A Financial Advisor
When it comes to setting the right money mindset, one way to set yourself up is to hire a financial advisor. It can be a very minor investment but depending on where you are right now, you might need the help of a professional. There are several ways you can get proper financial advice now.
If you think you’re mostly passable with your financial skills, you can use AI financial advisors called robo-advisors, which can help you automate where your finances go. These can calculate several areas of your financial standing and handle several factors like age, net worth, liquidity, risk tolerance, and more.
For those who have very high net worth or those who don’t have confidence in their financial skills, a financial advisor is a must. They can help you flesh out your long-term goals and plan accordingly.
#2. Decide Where You Want To Be
One of the simplest money-saving strategies that every baby boomer needs to do is to decide where they want to live. As you age, your needs change, and having a big home is not the best situation by default anymore. Knowing where you want to be over the last 15 years of your life should give you an idea of how to save.
Would you manage to go up the stairs? Are you looking to concentrate your wealth at home? Who will care for you except for your spouse?
Consider reverse mortgage on your property to prepare for a smaller, more pared-down home. This can give you a good extra flow of cash, as well as help you transition to a home that you can manage much easier.
Consider care options for yourself and your spouse too, especially if you only have each other. Handling preventative care now can help reduce the risks of hospitalization and other general health concerns at a later time.
#3. Pay Your Debt
A good chunk of financial difficulties for baby boomers come from debt, especially from credit cards. If you still have credit card debt, it should be a primary goal to clear it out as soon as you can. Paying the interest for your past purchases could be preventing you from better financial freedom.
Pay more than the minimum needed to pay off your credit card. Wherever you get extra money, put a good sum of it towards paying off the debt. This will allow you to focus on saving for other things in life, including saving for your retirement.
The same is true for other loans like car loans, mortgages, and more. The ideal situation is to be debt-free a few years before you retire. Being debt-free means you can put money towards investments until you retire. If you’re already retired, this will ease a good amount of financial burden off your back.
#4. Start Budgeting
Budgeting is something most people do, but for baby boomers, living on a budget is a must if you want to extend the life of your finances. If you’re still working, a budget can extend the value of your earnings, as well as ensure that you get some extra money going for your savings.
Develop a budget that accounts for 10 to 20 percent of your earnings going towards savings. You would also want to set aside money that will go towards building your emergency funds. None of this sounds fun, but a penniless retirement isn’t fun either.
Aim to set aside around half of your earning towards your necessities like housing, food, gas, and others. Set aside whatever you have remaining on wants, including dining out.
#5. Reconsider Your Life Insurance
If you have independent children that are fully grown, reconsider the value of your insurance. Most insurance policies include family members and dependents, as well as covering some other areas like your child’s education. Once they have their own lives, it’s best to have your policy reworked.
Consider a life insurance policy that has several riders, including inheritance to your heirs or a wider coverage for sickness and disability. You may also want something with an annuity that will help provide for you. By doing so, you can outlive your savings during your retirement and, hopefully, get more out of it.
The Bottom Line
Baby boomers are at risk of financial disaster if they’re not careful with their money. Fiscal prudence, better investments, and good budgeting skills might be necessary if you want to outlive your finances. Protect your savings today with these money management tips and get more out of it tomorrow.