How Baby Boomers Will Fund Their Retirement


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Whether you’re looking forward to retirement or planning to stay at your desk for as long as possible, one sad reality remains: for many of us, there will come a day when we can no longer work.

Perhaps the disease prevents you from having a job. Or maybe age discrimination – although technically illegal – is keeping you from getting a decent job. Whatever the reason, it is likely that at some point labor income will dry up.

What will you do then? Investopedia asked thousands of adults – including baby boomers aged 58 to 76 – to describe how they will support themselves financially once they are no longer able to work.

Here are the main sources of money baby boomers plan to tap into when work disappears.

13. Bonds (three-way link)

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Percentage planning to use it for income: 5%

Bonds have long provided retirement income for retirees. Particularly in earlier generations, those who in their golden years avoided risk often invested their money – and their retirement hopes – in government bonds.

Some retirees still use this strategy, but it has become less attractive as baby boomers and others turn to equities. Bonds offer some security, but remember that their lower yields tend to make retirees who choose them more vulnerable to inflation.

Looking for exceptional yield on bonds? Check out “This risk-free bond now pays 7.12%”.

13. My children or family will take care of me (triangle)

An elderly father has a serious conversation with his adult son
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Percentage planning to use it for income: 5%

When all else fails – your investments and savings go south, your expenses go north, and debts keep piling up – you can always turn to Junior to bail you out.

You have taken care of your children for 18 years or more. Think of it as recovery time.

Unfortunately, the reality today is that parents are more likely to care for children into adulthood than the other way around, as we detail in “8 Things You Shouldn’t Do At Home”. retirement”.

13. Cryptocurrency (three way link)

cryptocurrency bitcoin
Coyz0 / Shutterstock.com

Percentage planning to use it for income: 5%

Some might think baby boomers would view cryptocurrency as a fad, insisting it’s a game for young people. But 5% of baby boomers seem to be intrigued by Bitcoin and company.

If digital currency has piqued your interest, check out “9 Surprising Things You Can Buy With Cryptocurrency.”

12. Cash Value Life Insurance Plan

senior man holding money
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Percentage planning to use it for income: 6%

The promise of cash value life insurance is that you can use the money at some point to pay for expenses or have fun.

Critics say cash insurance isn’t a great investment, but others disagree. Wondering if this is the right option for you? Discover “Which is better: term or whole life insurance?”

11. Legacy

Last will and testament
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Percentage planning to use it for income: 7%

Some baby boomers have been lucky enough to receive an inheritance somewhere along the line. Those who were particularly wise decided to save this money for their golden years.

If you’re one of the lucky ones to inherit money, check out “7 Steps to Making the Most of an Inheritance.”

10. I don’t know

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Percentage planning to use it for income: 9%

Hey, let’s give these people points for being honest! Sometimes you just have to admit that you have no idea what the future holds. And that’s OK.

But having a plan is so much better. If you don’t know how you’ll afford to retire, sign up for the Money Talks News course. money made simple. MTN founder Stacy Johnson walks you through the steps that will ensure your golden years.

9. Real estate investments

House for rent
Andy Dean Photography / Shutterstock.com

Percentage planning to use it for income: ten%

Anyone who bought a home or rental property in the last decade is probably very happy with their decision today. And while there’s no guarantee that house prices will continue to rise, people will still need places to rent.

Buying a rental property is one of the most lucrative ways to generate retirement income. But that’s not your only option. We highlight some alternatives in “12 Ways Retirees Can Earn Passive Income”.

8. Annuities

Annuity
Vitalii Vodolazskyi / Shutterstock.com

Percentage planning to use it for income: 11%

Annuities seem to be among the most unloved retirement income solutions. But many experts say the right type of annuity can play a key role in providing retirement security for millions of people.

Money Talks News founder Stacy Johnson reviews the pros and cons of this option in “Should You Buy an Annuity?” ” The pros and cons.”

7. Mutual Funds

Mutual fund
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Percentage planning to use it for income: 13%

If you’ve invested any amount of money in the stock market, chances are that at least some – if not most – of that money is parked in mutual funds.

Markets go up and down, but it’s a safe bet that these investments will provide substantial income in retirement. So when you tap into your accounts to pay for your next cruise, be sure to tip John Bogle, the father of the index mutual fund and one of the great heroes of average investors everywhere.

Read more about Bogle in “Investing Pioneer Showed Us How Fees Rob Our Retirement Funds”.

6. Disability benefits

elderly woman in a wheelchair
Half Point / Shutterstock.com

Percentage planning to use it for income: 14%

If a long-term illness or injury has kept you from working for a long time, you’re probably thanking your lucky stars for disability benefits. Without these funds, you could actually face a very bleak retirement.

For more information, see “Are Social Security disability benefits taxable?” »

5. Invest in the market

breeding bull
Robert Cicchetti / Shutterstock.com

Percentage planning to use it for income: 16%

If housing has been good for people in recent years, the stock market has been amazing. Despite recent difficulties, the market has produced huge returns since 2009.

It’s no surprise, then, that many baby boomers rely on their investments to get them through retirement. Hopefully their expectations are realistic. The market gives, and it also takes away.

4. Savings or CDs

Smiling woman with piggy bank
stockfour / Shutterstock.com

Percentage planning to use it for income: 22%

The stereotype of a retiree is someone who puts money in savings accounts, CDs, bonds – and maybe a few dollars in their mattress.

Baby boomers have overturned these stereotypes, but a good percentage still appreciate the security and stability of conservative investments.

If you’re one of them, stop by our solution center and search for a great savings account rate.

3. Pension

Seniors playing games together
LightField Studios / Shutterstock.com

Percentage planning to use it for income: 27%

Relatively few Americans still have pensions from their jobs, but those who do can sleep much easier in retirement than many of their peers without a pension.

If you’re a young worker yearning for a pension, it might be time to explore a new home. To learn more, read “Top 10 countries for pensions”.

2.401(k)

401(k) retirement nest egg
Andrey_Popov / Shutterstock.com

Percentage planning to use it for income: 28%

After decades of delayed gratification — and taxes — pumping money into your 401(k), retirement is when you can finally reap what you’ve sown.

More than a quarter of people plan to use their 401(k) to fund their retirement. To make this money last, they will have to carefully dip into their accounts. If that thought scares you, stop by our Solution Center and find a great financial advisor who can help.

1. Social Security

Social Security payments
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Percentage planning to use it for income: 70%

Social Security has long been a lifeline for millions of American retirees. Almost three-quarters of survey respondents say the government’s pension program will play a key role in providing the funds needed to see them through their golden years.

Deciding when to file a claim for benefits will play a major role in how effectively Social Security funds your retirement. So stop by our solution center and learn expert advice that can help you plan a great social security strategy.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click on links in our stories.

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