Eileen Ambrose of the Baltimore Sun wrote an article recently about 50 year olds that haven’t started saving for retirement. I am not profiling the article just because I am quoted in it; rather, it brings up an interesting topic. Many boomers haven’t saved adequately for retirement. It is estimated the average boomer only has $54,000 saved for retirement. This isn’t going to do it.
Ambrose looked at late bloomers to see if they can make up for lost time. The answer is probably. It depends on how much the markets return and how much the boomers can muster to save. For a motivated boomer with low savings, they can still come out ok. The key is to get started. Too many folks look at saving for retirement as such a daunting task that they never begin. This is a natural instinct. If a task seems so big, we often feel to frustrated to begin. Remember, that a journey of a thousand miles begins with a single step.
The boomers have some wind at their backs. Many boomers have just finished off paying their childrens’ college costs so they have disposable income for the first time in their lives. Lots of boomers are coming close to paying off a mortgage as well, which only frees up more money. The boomers are also in their highest earning years as well now that they are at the top of the business food chain compared to years earlier when those grumpy old WWII and Korea Vets were. 
Heck, the past two Presidents are boomers so that shows you that they are top cheese today. Even the recent unemployment mess hasn’t hit the boomers as hard as younger folks. The unemployment rate for folks over 55 years of age is 6.8% compared to 10% nationally. Of course, those boomers that were laid off are finding it harder to find a job.
Granted, boomers saving for retirement now have an uphill battle and won’t match the results of counterparts who began a couple decades ago, but boomers may not need as much as they think. I often find that once the mortgage is paid off many retirees only need between $4,000 to $6,000 per month to live. If the average social security is $2,300, then a married couple could expect between $3,450 and $4,600 per month from social security (depending if both spouses receive their own working benefit or if one spouse just receives the spousal benefit). This means that a couple may only need $1,000 per month in cash flow from investments each month. This could be satisfied with a portfolio of $400,000. This may seem daunting if you don’t have anything saved, but if you have $50,000 or $100,000 saved along with $200,000 in home equity, this isn’t bad.
Even if you have nothing saved and don’t plan to move to a smaller home to access home equity, you would have to save $28,629 per year for ten years to get there assuming a 6% return. At 8%, this number drops to $25,566. This is really the size of a mortgage payment or annual tuition bill. This analysis doesn’t include part-time work after retirement. Not only does part-time work help financially, it can help you physically and mentally as well. Staying engaged and active increases longevity and maintains health and mental capacity.
So if you are a boomer who feels you are behind, remember that it isn’t too late. You just need to do the toughest thing and take that first step.