A nice house in the suburbs with a white picket fence, a slightly overweight pet who is a little bit of a rascal, a tidy garden producing beautiful flowers all year round, and a golf course within a half hour’s drive. Ah, retirement sounds like a dream.
This year, the youngest members of the baby boomer generation will be pushing towards retirement at 57 while the oldest will turn 75. Baby boomers make up a large chunk of the United States population and, by 2030, one in five Americans will be above the age of 65. In addition, boomers have been retiring at a much higher rate since the advent of COVID-19, placing extra strain on our stretched Social Security system. So what does retirement look like for our nation’s boomers?
Do Not Go Gentle Into That Good Night
The boomer generation has been distinctive in its culture and values. Born during the post-war economic expansion, boomers are known for embracing middle-class suburban life and the consumerist ethos. Backed by substantial wages, many of them managed to live comfortably and pay off their mortgages, with 41 percent of their homes being owned outright. Economists have been waxing lyrical about the record-breaking volume of assets currently held by boomers—a staggering combination of nest eggs estimated to be worth $30 trillion.
While the economic climate of their youth might have given them a financial leg up, there is no denying that boomers are widely regarded to have forged their success through diligence and commitment. Boomers were born to realize the American dream and they have worked hard to make it a reality. As these driven individuals shift into their senior years, they are redefining the old-fashioned concept of retirement. After decades of being competitive and steadfast in their careers, many boomers prefer not to be sedentary. Instead, they choose to stay active by trying new experiences and pursuing their passions.
Part of this philosophy of seizing the day is the decision to spend money on themselves instead of setting it aside for inheritance purposes. A survey by life insurance company SunLife found that 56 percent of boomers wanted to enjoy their money instead of saving it for their heirs. This concept is so popular that it has even spawned its own acronym—SKI, short for ‘spending the kids’ inheritance.’ And why not? After decades of personal sacrifices and supporting their children, retirees should be allowed to reward themselves and enjoy the fruits of their labor.
There But For Fortune
With the image of boomers predominantly based on their professional and financial success, we often forget that older boomers formed the core of the American hippie movement. While the hippie movement is often generalized to revolve around drugs and free love, the underlying spiritual philosophy of peace, freedom, and mutualistic love continues to be embraced by many retirees today. And with this, the desire for travel and exploration and to connect with people from other cultures.
According to a recent survey, 54 percent of boomers are looking forward to traveling this year despite pandemic protocols. Of these aspiring travelers, 13 percent are planning to book voyages aboard cruise ships. But wanting to travel does not necessarily mean that retirees can afford it. Many boomers are on a fixed Social Security income and have most of their money tied up in assets such as their family property. Retirees are faced with a tough choice when they have to decide between selling their home and giving up their dream of seeing the world.
Luckily, there are now several financing options to help retirees achieve more mobility for their monetary assets. One of these is the reverse mortgage. Reverse mortgages are perfect for retirees who have little liquid cash but a large amount of equity built up in their homes. A reverse mortgage is fundamentally a deferred sale agreement whereby senior homeowners receive payments that add up to the equity of their property but continue to own it. Based on their needs, retirees can opt for payouts in the form of lump-sum withdrawals, monthly payments, or periodic credit advances.
The best part of reverse mortgages, however, is that seniors can continue to occupy their homes even while they seek adventures beyond the horizon. A family home contains millions of memories and retirees always prefer to come home to somewhere comfortable and familiar. Reverse mortgages also provide seniors with the ability to live independently, a quality that is highly valued by the capable and self-sufficient boomers. Although there are some reverse mortgage disadvantages, they have provided many retirees with the financial freedom to pursue their bucket lists.
As technology and transport advances make the world smaller, there are more and more places for retirees with itchy feet to visit. Even at home, there are a myriad of new and exciting hobbies ranging from salsa to sailing and scuba diving. Vow renewal ceremonies on milestone anniversaries are a wonderful way to celebrate a lifetime of love and that sun-filled conservatory that is waiting to be built will be so cozy in the wintertime. Life is waiting. Young people are not the only ones who get to brandish the term YOLO. You only live once applies to all of us. So, set the boomers free and let them have fun!