The Triple Threat to Baby Boomers' Retirement Plans


The Triple Threat to Baby Boomers' Retirement PlansAfter long careers, members of the leading edge of the baby boom generation have gotten to the age where many of them would like to retire. But more baby boomers have chosen to put off their retirement plans -- and the reason may surprise you.

For a long time, baby boomers have been known as the Sandwich Generation. The reason: Many have not only had to provide for their children's financial well-being but are also taking care of aging parents whose own retirement savings have run out.

With two generations of dependents relying on them for their financial survival, baby boomers have found themselves stuck in the middle for years, with a huge financial commitment to family members.

But a recent survey from Scottrade reveals a new source of stress for baby boomers. As their adult children grow up, many boomers now have grandkids -- and with their children in financial straits, these boomers often end up getting called on to cover expenses for those grandchildren as well.

The survey reports that the number of boomers owning a college or education savings account doubled from last year, with one in nine listing saving for a family member's educational expenses as a key reason to invest.

Not surprisingly, if you're a baby boomer, having three generations of family members depending on you creates plenty of stress. In the survey, 73% of boomers said they were at least somewhat stressed about their current financial situation, with many reporting worries about making mortgage payments and paying bills.

Retirement Worries Piling Up

Baby boomers approaching retirement face a combination of challenges all at the same time:

When it comes to financial planning, you simply have to put first things first.

Getting to 'I Quit'

If you're between 45 and 65 and feel stressed about your financial situation, you're not alone. But don't make the mistake of thinking you'll never be able to retire. With some discipline and extra effort, you can set things up so that everyone in your family gets what they need.

First, make sure that at least part of your income is going toward your own financial future by funding a retirement account for yourself. If your employer offers a retirement plan, nothing could be easier, because the money comes out of your paycheck before you even get it. In addition, many employers offer matching contributions to retirement plan contributions. Even companies like Ford (F), General Motors (GM), and United Parcel Service (UPS) that temporarily suspended their 401(k) matching during the recession have come around and reinstated matching in the past couple of years.

Moreover, don't let yourself get trapped into thinking that bad economic conditions right now equate to a lifetime of financial misery for your kids. Young adults almost always struggle to make ends meet early in their careers, and while times are tougher than normal right now, many of the boomers' children who are relying on their parents for support will eventually become financially independent when the job market starts heating up again -- albeit perhaps later than their parents might have hoped.

Finally, make sure that if you're supporting your parents, they have the tools they need to avoid catastrophic expenses. For instance, if something happens that requires your parents to get nursing-home care or home-health care support, long-term care insurance can kick in to pay for much of the expense associated with those services. In addition, by knowing the rules for government support like Medicaid and other programs, you can ensure that your parents get all the benefits they're entitled to -- rather than having to dip into your own pocket.

Motley Fool contributor Dan Caplinger is in no hurry to retire but thinks he will someday. You can follow him on Twitter here. He doesn't own shares of the companies mentioned. The Motley Fool owns shares of UPS and Ford. Motley Fool newsletter services have recommended buying shares of GM and Ford.

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Gregory Dunlap

If you are a resident of Maryland, and would be open to some tips from an advisor, respond to this post with contact information.

December 12 2011 at 5:17 PM Report abuse +1 rate up rate down Reply

I pray ea. day that the next World is better than this one, that we will be using something else besides the dollar bill up there. ed in tx 77563

December 11 2011 at 5:47 PM Report abuse +1 rate up rate down Reply

Plus hyperinflation vs fixed income, loss of Pension and or SS. Not to mention massive numbers of legal and illegal immigration that may not want to pay for upkeep on old white folk.

December 11 2011 at 11:24 AM Report abuse rate up rate down Reply
1 reply to ajax's comment

Will they pay upkeep for old black folk? What about the old red and yellow folk?

December 11 2011 at 9:30 PM Report abuse +1 rate up rate down Reply

You simply tell your kids NO. It is not your resonsibilty to pay for their college. And then grandkids ? Are you kidding ? You need to take care off your parents.

December 10 2011 at 12:22 AM Report abuse +1 rate up rate down Reply

People that gave the kids everything all through life wind up like this. Mom and or Dad giving money is normal to them. Parents, try learning a new word. NO. It is not a right for you to support them. If you do and then complain you can't retire go look in the mirror.

December 09 2011 at 9:14 PM Report abuse +1 rate up rate down Reply
1 reply to jhrooney's comment

So true. There are a lot of spoiled brats of all ages out there.

December 09 2011 at 9:21 PM Report abuse +1 rate up rate down Reply
1 reply to savemycountry911's comment

Yeah , well into their 80's

December 11 2011 at 11:24 AM Report abuse +1 rate up rate down

To IGreen if you have the nerve to show up.

Our employers contributed 15% of OUR income before taxes to SS. If we only
made $30,000 per year, that is $220,500. If you calculate the future value of $4,500
per year (Our's and our employers contribution, and that was also our earnings) at 5%
interest (when we could get that much) after 49 years of work we'd have $892,919.98

December 09 2011 at 7:25 PM Report abuse +1 rate up rate down Reply

Yeh, Right - get long term care insurance when your parents are in nursing home statis. Can't happen. This article is meaningless and oversimplified!!

December 09 2011 at 2:32 PM Report abuse rate up rate down Reply

Baby Boomers supporting three generations besides ourselves. Darn...we are good!

December 09 2011 at 1:49 PM Report abuse +1 rate up rate down Reply

Nowhere is it written that you owe your children a college education. You would do just as well teaching them to be innovative. College only produces drone bees for the corporate structures. Entrepeneurs often lack college education, and many sports stars don't need diplomas to be millionaires. One may have to care for parents, but seems to me like children on down can care for themselves. But then I don't have children -- which is a relief in light of this article.

December 09 2011 at 1:45 PM Report abuse +1 rate up rate down Reply
Mark Davidsaver

Don't forget the value of one or both spouses working part-time. When I ran the numbers that is what made it possible. I used the Complete Retirement calculator int he retirement section of for my retirement numbers.

December 09 2011 at 12:47 PM Report abuse rate up rate down Reply