Baby Boomers are pioneers on the frontier of life expectancy. Living longer than any other previous generation also means you  must have the financial resources to meet your extended needs.
     Unfortunately,  many boomers have recently received  an unpleasant financial wake up call. They have seen their stock portfolios and 401 Ks drop dramatically, and have new concerns about their retirement plans. 
     Many baby boomers are also members of the “sandwich generation,” meaning that they are under enduring maximum financial stress. They are still paying for their children’s  educations, planning for retirement, and supporting elderly parents. 
      If one took a clear snapshot of  today’s boomers finances, how healthy would their future look?
     One third of baby boomers are well off. They are earning large salaries, have invested profitably, and will be lucky enough to be the major part of the population that receives ten trillion dollars inheritance from the preceding generation. 
     Another third will have to extend their work life at least five years beyond their current expectations, in order to have a satisfactory retirement.  If fortunate enough to inherit some money, they may enjoy a truly comfortable retirement.
     The last third of the baby boomers, largely female, have virtually no savings, no investments, no pensions and in all likelihood will receive no inheritance. 
     What bothers me the most is that many baby boomers are financial illiterate. A recent study by Professor Neil Cutler of The National Council on the Aging (NCOA) found that half of boomers didn’t know that Medicare didn’t pay for long term care. In addition , although two-thirds of boomers say they’re worried about having enough money in the future, 64 percent say they have no idea how much money they’ll need in retirement. The answer most experts give is you’ll need 60 to 80 percent of what you now earn.  While spending more on health care, your living expenses will drop more than your medical bills will rise. 
     Adding to baby boomers sense of financial malaise is the realization that that Social Security and Medicare were not designed to match their generation’s size and extended longevity. According to a recent Age Wave/Roper poll 90 percent of boomers believe that the government has made financial promises that it will be unable to keep. 
     Of course, the best prescription for retiring well is to have a disciplined saving plan in place. Unfortunately, America has the lowest saving rate of any developed country in the world. Part of the problem for boomers is that they are not long-range planners. Would you believe, 40 percent of retirees have saved less than $50,000?  This is partly due to the fact that they are overwhelmed trying to meet the demands of both family and work. My motto, as I go through life, is its never too late, so if you haven’t got a savings plan, start one now.
     While I have pointed out potential problems, I would also like to offer some possible solutions.
     The first step to making your financial resources last as long as you do is paying down your high interest debt (loans and credit cards) as soon as possible.   
     Educate yourself about your financial resources -- pension, 401k’s, etc. Given the complex financial options surrounding retirement, it is probably a good idea to consult with a certified financial planner.
     Start saving at least 10 percent of your income monthly. Remember, the stock market is unlikely to have double-digit returns in the foreseeable future. I guess we’ll see returns in the range of five percent. Bottom line, the stock market won’t miraculously allow low savers to become well off retirees.
     Maximize all allowable tax-protected savings, such as 401k’s to take advantage of compounding growth. Find out about the new catch up provisions for workers 50 and older.
     If you find yourself house rich but cash poor, there are a number of options you can pursue. They include a home equity line of credit and a reverse mortgage. These options are so complex and valuable that we’ll take them up in a separate article.
       If you’re still curious about outliving your nest egg, here is a web site that offers a free retirement income calculator. www.troweprice.com/ric.