First Person: Generation X Is Helping Boomers Plan for Retirement?

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Growing up with financial heroes like Alex P. Keaton on the television show Family Ties and Bud Fox from the movie Wall Street, it's no surprise that I ended up with a pretty strong background in finance and personal finance. Since I'm right on the cutoff area of Generation X and Generation Y, I see an interesting variety of viewpoints from people around my age group. Unfortunately, many of these viewpoints don't lean toward what I would call fiscal responsibility. However, ever since I can remember, I've found that financial responsibility came naturally to me. I guess this is why I'm now helping some of the baby boomers in our family in their efforts to plan for retirement.

Setting up Financial Planning Spreadsheets

I'm actually helping two separate boomers plan for their retirement. For one of them -- a person who is a bit more financially organized -- I set up a spreadsheet that tracks and takes into account a variety of financial aspects of her life. It predicts her expected expenses in retirement, her expected income from Social Security, the rates of interest and earnings on her investments as well as a breakdown of monthly income from those investments. It also reviews areas of interest or hobbies that she might develop into extra sources of income in retirement.

I tend to update this spreadsheet about twice a year since the person in question has not yet entered retirement. Yet this relatively simple spreadsheet provides a pretty all-encompassing look at her overall retirement picture.

Developing Budgets

For the other boomer -- who is a bit less prepared for retirement -- I started off by creating a monthly budget outline. Since this person really had no idea of how much was being spent each month on expenses, it was a good starting point; and it came as somewhat of a shock to this person as well. Seeing all those smaller individual costs lumped into one large monthly sum can be a bit hard to handle, but is often necessary as a point at which to begin one's retirement planning.

We then compared this expense number to estimated income in retirement. Seeing as there was a substantial gap and since I'm still working with this person, the next step in our planning process is to go back and see if a pension plan that's been paid into might have a few missed years made up for by way of a lump sum payment to increase monthly retirement distribution amounts. The other part of our current planning process is reviewing the monthly budget to look for areas in which to cut costs during retirement.

Discussing Options and Timeframes

Our retirement planning doesn't just end with comparing expenses to income and knowing how to rely upon certain assets as draw-down accounts during those golden years though. In the two cases that I've been dealing with, there are a multitude of other factors to consider. Here are a few of the more major issues to be discussed during our retirement planning talks:

  • · Life expectancy
  • · Healthcare options and costs
  • · Possible extra sources of income in retirement
  • · Retirement location
  • · Debt payoff amounts and timeframes
  • · Travel amounts and vacation homes
  • · Family support (from kids helping out around the home)
  • · Supporting family (helping adult children that still need assistance)

So you can see that we still have some ground to cover and adjust for in the next few years between now and when these people would like to retire. While significant ground has been covered, there is still plenty of work left and this Gen X'er is attempting to do his part to ensure that the baby boomers have their financial bases covered in retirement.

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