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Jan. 31, 2020, 1:11 p.m. EST

Why are so many baby boomers ignoring financial planning?

There’s no time like the present to step up

By Kerry Hannon


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Ignoring the problem only makes it worse.

A new survey by the National Association of Personal Financial Advisors (NAPFA) reports that one in three baby boomers who are nearing or starting retirement — hasn’t done any financial planning in the last two years .

Seriously. The “I’ll think about it tomorrow” approach is alive and well.

This latest report card shows that baby boomers are only slightly in front of millennials when it comes to retirement planning. More than half of millennials and members of Generation X, as well as over one-third of boomers, haven’t started retirement planning, according to the NAPFA survey. More than one-third of millennials and Gen Xers don’t think they’ll ever be able to retire.

A deeper dive: 37% of boomers have not considered their options for retiring; 1 in 3 don’t think they’ll ever be able to retire; 16% don’t know how much money they need to retire; 21% say $1 million to $2 million sounds about right

“I was surprised at the small number of baby boomers who said they thought they would feel financially prepared for retirement,” said Lauren Zangardi Haynes, a fee-only financial planner at Spark Financial Advisors in Richmond, Va.

I get it. The word “retirement” has the connotation of stepping back from life, receding from the world, not moving forward to embrace a new chapter. I’m not sure precisely what stops us from planning for it from a financial perspective, but most of us are guilty of the back-burner approach, even when we know better.

But while the mantra of mentally focusing on staying present may be a good approach to allaying anxiety, being grateful and savoring today, you do need to set time aside to look ahead when it comes to saving and your future financial security.

Grappling with crystal balling potential expenses that may roll in two decades or more from now, as we live longer and presumably healthier lives, can seem like throwing darts blindly at a board. It’s non-negotiable, though. Kicking the can down the road isn’t any way to live your life when it comes to money issues. Little wonder that 30% of baby boomers surveyed said that they think finances will stress them out in the later years of their life.

That’s why there’s no time like the present to step up. “Taking action will help you feel less stressed and more prepared for retirement, Haynes said.

I couldn’t agree more. My advice: switch it up. If retirement planning sounds like a bleak task, think of it as planning for life, rather than retirement.

Next, as I wrote in this recent column , if you haven’t already put money into your 2019 retirement account, you have until April 15. Do it. You can contribute up to $19,000 to a 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan. And you can contribute up to $6,000 to an Individual Retirement Account (IRA). If you’re aged 50 or older and qualify, you can contribute an additional $6,000 to an employer-sponsored plan and $1,000 to an IRA.

If you’re self-employed, you can contribute up to $56,000 ($62,000 if you’re 50 or older) to a solo 401(k) plan by April 15, or the deadline date for your extension. Your contributions can’t exceed your self-employment income for the year. Another option for self-employed people is a SEP IRA. These contributions are limited to 20% of self-employment income, up to $56,000. For a SEP-IRA, you must deposit contributions for a year by April 15, or the date of your extension.

Read: Self-employed people have a lot of perks when it comes to saving for retirement

This is also a good time to start thinking about how to boost your retirement contributions in 2020. The maximum individuals can contribute to 401(k)s for 2020 is $19,500; $26,000 for those 50 or older. If you’re self-employed, in 2020, you can contribute up to $57,000 ($63,500 if you’re 50 or older) to a solo 401(k) plan and $57,000 for a SEP IRA.

Read: You’ll be able to put more money into your 401(k) in 2020 — but not your IRA

If you have a qualifying high deductible health care plan, take advantage of a Health Savings Account (HSA). If you’re over age 55 you can make an extra $1,000 catch-up contribution on top of the $3,550 contribution for an individual, or $7,100 family contribution limit. “Most people don’t realize that HSAs can be great tools for saving for retirement,” Haynes said.

Seek out help from a financial adviser. If you don’t have one on board, you can search for a fee-only planner on the websites of the National Association of Personal Financial Advisors , the Financial Planning Association , the Garrett Planning Network . Look for a planner with a Certified Financial Planner designation.

One caveat about CFPs. I have long recommended working with an adviser who holds this designation, and still do, but last summer there was a report by The Wall Street Journal alleging that the CFP Board failed to accurately vet thousands of CFP professionals’ regulatory, disciplinary and criminal history. As a result, this information was not reported on its letsmakeaplan.org site, which is designed to help you search for a planner and review regulatory records for CFP professionals.

In response, the CFP Board said it would no longer rely chiefly on self-disclosure to evaluate an adviser’s regulatory history. And that all certificate holders–there are more than 86,000–would undergo to a yearly background check of publicly available information, including FINRA BrokerCheck profiles and the SEC’s IAPD database.

Moreover, in a recent interview with WealthManagement.com, Jack Brod, the new chair at the CFP Board, said his top priority was addressing the recommendations, submitted in November, by an independent task force led by securities consultant and former Texas Securities Commissioner Denise Voigt Crawford, which was established following the report by The Wall Street Journal.

This is all good news. That said, do your own due diligence and check an adviser’s profile on Brokercheck.org. This site, run by FINRA, provides information about any licensed broker or investment adviser. It runs the gamut from their job history, their securities license and, whether they’ve ever been disciplined by FINRA or the Securities and Exchange Commission.

Finally, since I tend to be an upbeat kind of gal, let’s spin those NAPFA survey results. A mere 11 percent of baby boomers surveyed said “grim is the word they associate with retirement — more than one third said the word is “joy”.

Link to MarketWatch's Slice.