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By: John GrobeOK Boomer! That phrase is viewed as a dismissal of the concerns of the “Baby Boom” generation by younger generations (millennial, GenZ, etc.). It has been described as a cry or frustration from those who followed the large Boomer generation (born between 1946 and 1964). The baby boom began immediately after World War Two and that large generation, much like the proverbial pig in the python, changed American society as it moved through.
The first of the Boomer generation reached age 65 in 2011, while the last will hit 65 in 2029. Those who were born in the peak year of the boom (1957) turned 65 in 2022. In 2030 there will be more people 65 and over than 18 and younger. Many of readers fall into the category of Boomers and this article will explore whether things are really OK for us Boomers.
The aging boomers will have an effect on Social Security and Medicare.
• In Social Security, the number of workers supporting each retiree has been shrinking and will continue to shrink. The annual report of the Social Security Trustees shows that the insolvency date of Social Security is getting closer and closer. If politicians in Washington don’t do anything, it’s possible that Social Security might actually become insolvent in our lifetime. Keep in mind that in 1983 (a time of greater bipartisanship and civility) Social Security was only three months from insolvency before reforms were instituted.
• Older people need more medical care than younger people, so there will be an effect on Medicare as well. The future of Medicare Part B, which is funded by premiums paid by participants, is less of a concern than that of Part A, which is funded by payroll taxes. The annual report of the Medicare Trustees is every bit as pessimistic as that of the Social Security Trustees.
Will there be changes in these two programs in the future? I’m sure there will be, but we don’t know what they will be yet. We can expect that Washington will dawdle in enacting any changes, but that doesn’t mean that we cannot take steps to protect ourselves against negative future situations.
What can we do? We can heed the words Ricky Nelson sang back in 1963 (when the oldest boomers were 17 and the youngest hadn’t yet been born) – It’s Up to You.
It’s time to shift into high gear in your retirement planning. Don’t just focus on how to increase your retirement income – after all it’s too late for those of us who took our first breath in 1946. Focus on how you will live in retirement, there are ways to reduce expenditures that will enhance your retirement and cost less than alternatives.
Here are some things to consider:
• If you’re still working, consider increasing your contributions to the Thrift Savings Plan. If you’re already maxing out the TSP, set more money aside in an Individual Retirement Arrangement (IRA), or in a taxable brokerage or savings account.
• If you’re considering relocating, strongly consider downsizing, or moving to a lower cost of living area. This will free up money (often without having to pay capital gains taxes) and lower future expenses.
• Consider working slightly longer, which will increase your FERS annuity, TSP and Social Security. Not only will this increase your retirement income, it will reduce your total retirement expenses, as you would be drawing on your retirement funds for a shorter period of time.
• Work part-time (make sure it’s at something you enjoy) during your early years of retirement. Watch out for the earnings test that applies to the FERS supplement and Social Security between your Minimum Retirement Age under FERS (57 for those born in 1970 or later) and your Full Retirement Age for Social Security (67 for those born in 1960 or later). The 2024 earnings test will result in a reduction of $1 for every $2 your earned income exceeds $22,320.
A word to those who are younger than Boomers. You’ve got more time to implement the strategies above. Remember – it’s never too late if you start now!
John Grobe, President of Federal Career Experts, is an expert in the area of federal employee retirement and benefits. This expertise comes from his 26 year federal career in which he managed the retirement program in a 3,500-employee office of a large federal agency.
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