Downsizing into retirement

Question: My fiftieth birthday is coming up this year. I have a nice income, but I've been educating three kids, and my retirement savings are pretty pitiful. Now that our children have moved out, we can save more and have considered downsizing. Have we waited too late? Answer: Maybe. But you have lots of company! This is the year that Sylvester Stallone is planning a comeback (Rocky 6) at age 59 and Goldie Hawn, the bikini-clad blonde of Laugh-In fame, turns 60. In fact, the leading edge of the baby boomers starts turning 60 this year. Boomers have prided themselves for blazing their own way, for doing things differently than did their parents. And they have indeed succeeded in being different. While their parents worked, saved and lived modestly, boomers have gone for the gusto and enjoyed each day to its fullest. Or at least, to the fullest extent of their credit card limit. They have lived in larger houses, driven bigger cars, raised their children with every possible advantage, taken cool vacations and, generally, lived the good life. And unless the typical American baby boomer discovers oil under his living room floor, his version of "retirement" is going to look very different from his parents' version of retirement. If traditional retirement means full-time leisure and no work, very few baby boomers will experience that at age 65. They just do not have the money saved or invested. Consider a 50-year old couple who has a $75,000 duel income and $100,000 saved for retirement in their retirement plans. If they wanted enough money to replace 70% of the $75,000 in retirement, they'd need about $1,000,000. They'd have to save $2,000 a month for the next fifteen years to do that. That's about 30% of their income before taxes. Impossible to do? Not at all. Improbable? Yep. Just look at the track record. My advice is to downsize your lifestyle, super-size your savings and resize your career. 1. Downsize your lifestyle. Moving to a smaller house may create many opportunities for you. Your house notes would shrink or go away. You may have some home equity you could turn into income producing assets. A more efficient house should save on maintenance and utilities. Downshifting can save hundreds and even thousands of dollars each month. 2. Super-size your savings. With lower or no house notes, no kids to feed or educate, smaller cars to drive and generally lower maintenance costs on your home and auto, you ought to be able to save a significant portion of your income. To be blunt, the trouble with most boomers is that all this "freed up" money usually goes to more toys or trips. Be realistic about what you can really afford. 3. Re-size your career. Most boomers aren't going to have enough saved and invested to transition from full time work to full time leisure at age 65. I expect most of them will have to work into their sixties and seventies. This doesn't have to be a bad thing. But you'll need a plan to move from "high energy producer" to "elder statesman" in your career. Manufacturers report a chronic shortage of skilled labor. Knowledge workers ought to be better as they get older - but it is up to you to stay sharp in your field. Management guru Peter Drucker took a position at Clairmont College because, unlike his previous employer, Clairmont had no mandatory age 65 retirement policy. Some of Drucker's most productive years took place at Clairmont over the next 30 years. He died just this month age 95. I expect that the baby boom generation will redefine the idea of "retirement." It will mean longer careers, fewer hours, simpler lifestyles and an older workforce. There's no doubt about it - this isn't your father's retirement.

Byron Moore, CFP® is a registered representative with UVEST Financial Services, Member NASD, SIPC. Argent Advisors, Inc. and UVEST are independent entities.