More than most soon-to-be-retired workers realize baby boomers don’t have the nest egg they imagine. According to a study by the American Bankruptcy Institute, baby boomer bankruptcies are on the rise with 42 percent of all filings in 2007 being from the generation of Americans born in the years following the end of World War II.
Where is the money? It’s true that baby boomers’ most productive years were in an age of increasing prosperity, low unemployment, rising home prices, and steady economic expansion. So, one common argument follows: If any group of Americans should be ready for retirement, it’s baby boomers, right?
Wrong. While the left side of the balance sheet has plenty of good news, the right side reveals far more challenges. First, costs are rising across the board: health care for retirees, education costs for children, and transportation and food costs, too.
Second, there are more mouths to feed: 58 percent of baby boomers are financially responsible for their parents and 93 percent have offered financial aid to their adult children. These inter-generational transfers are much greater than previous generations experienced. Consequently, they drain baby boomers’ rainy day fund.
Finally, the chickens are coming home to roost. Most baby boomers admit that they weren’t exposed to budgeting when they were young and didn’t talk to their parents about planning for retirement. As a result, many are unprepared for the financial reality they face. Experts agree it’s critical for budgeting and retirement conversations to start early.
So how can you help your baby boomer parent? You should encourage them to develop a financial plan. And if they are like the 35 percent of over-65 Americans who rely exclusively on Social Security, you may want to talk to them about all of their options – including bankruptcy. To find out what you need to know to get the conversation started, talk to the professionals at Fears Nachawati today. We’re ready to help your family.