Money in the Middle

Sandwich Generation Talking About Money Up, Down and Across Generations

Baby boomer tips to their children on retirement

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 There was generally good news about the state of Medicare and Social Security last week when the trustees released their 2010 Annual Report.  Good news for  baby boomers.  Not so good for the generations following us.

 Medicare is looking much healthier, thanks to the changes in the health care reform bill that reduces costs for prescription drugs and physician services..  The Hospital Insurance trust fund is expected to remain solvent an additional 12 years – until 2029.  While Medicare finances have improved, further reforms will be needed. 

Social security isn’t sitting quite so pretty, but there’s no reason for alarm.  The recession’s combination of fewer workers and more early retirees means that Social Security expenditures are expected to exceed tax receipts in 2010 for the first time since 1983.

 “The fact that the costs for the program will likely exceed tax revenue this year is not a cause for panic but it does send a strong message that it’s time for us to make the tough choices that we know we need to make,”  said Michael J. Astrue, Commissioner of Social Security. 

The report said that the deficit is expected to shrink substantially for 2011 and to return to small surpluses for years 2012-2014 due to the improving economy.   But as the baby boomers begin retiring in larger numbers in 2014 the number of beneficiaries grows substantially more rapidly than the number of covered workers.

So we’re beginning to hear a lot more –from both political parties – about the need to tackle the issue of retirement age. It’s unlikely that it will impact the benefits of baby boomers – most of whom will reach full retirement at age 66.

But for those younger, the role of Social Security is likely to change as is the nature of retirement planning and work.

It’s a very difficult environment for people who are good planners when it comes to their finances. 

The best advice baby boomers can give their children: count on long and varied careers.  Keep funding that 401(k) plan as much as you can.

 Learn from our mistakes : plan better; rely on your own savings; live within your means (that one’s from your grandparents) and find work you enjoy

You’re going to be counting on your own resources more than your parents or grandparents!

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Written by Laura Rossman

August 9, 2010 at 7:33 pm

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