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Jim Lentini: Boomers and future retirement

Business Commentary

Posted: January 24, 2011 10:39 p.m.
Updated: January 25, 2011 4:55 a.m.
 

Reportedly more than 10,000 baby boomers a day will turn 65 in 2011, and the trend is expected to continue for the next 19 years. Baby boomers are facing a number of issues as they plan for retirement.

Recently we have heard that many government pension plans are underfunded because of the structure of these plans and the longevity of increasing benefits.

The private sector that pays for government pensions is not faring well in preparing for its own retirement goals.

The situation is reported to be serious, because baby boomers have not saved very effectively for retirement and are still retiring too early, according to Olivia Mitchell, director of the Boettner Center for Pensions and Retirement Research at the University of Pennsylvania.

Boomers are concerned for several reasons. The financial meltdown of 2008 affected the value of their pension plans and many who moved assets into conservative portfolios missed the growth of recovery following in 2009.

Many retirees banked on the value of their homes for the mainstay of their retirement funds, but values are still low and many boomers still have mortgages.

With the current business climate, boomers both need and want to work longer than previous generations.

Many have lost their jobs and as a result are applying for Social Security benefits early, as soon as they become eligible at age 62. Receiving Social Security benefits early will result in less income than if a person waited until normal retirement age.

As recommended in previous columns, now is a good time to consider some retirement assets in variable annuities with a guaranteed withdrawal benefit.

In our unstable and uncertain times, it is one way to protect assets, guarantee growth and income, and have inflation protection for that income in the many years of retirement.

In addition to the problems mentioned for boomers and their retirement plans, 2011 is bringing an increase to estate, gift and generation-skipping transfer taxes.

Now that you have worked hard, saved well and invested prudently, you want to protect your estate for the benefit of yourself and your family.

It is imperative to work with your financial and tax adviser to design and implement an estate plan to accomplish your goals, and minimize the taxes to be paid.

Jim Lentini, CLU, ChFC, IAR is president of Lentini Insurance & Investments Inc. He can be reached at (661) 254-7633. His column reflects his own views and not necessarily those of The Signal.

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