Over 50, underfunded, and ill-prepared for retirement. Unfortunately, that’s an all-too-common scenario for the Baby Boomer generation – those born between 1946 and 1964 -- many of whom are still smarting from the economic downturn and are now looking back at their earlier financial choices with regret.
Should they have bought that house at the height of the housing bubble? Should they have taken out that student loan? Should they have pursued a higher-paying career field?
But doubts like these are just part of the new reality for today’s Boomers, says Stan Hinden, author of “How to Retire Happy” and a widely published columnist on retirement issues.
“I think Boomers are somewhat disappointed in the way things have turned out in recent years,” he says, “and I think they have a right to feel that something unfair has taken place. You can’t any longer buy a CD or invest in a money market fund and get any kind of respectable return, because interest rates are so low and have been so low and will continue to be so low that people have lost some years of investment potential and income. People can hope that that the situation improves but I don’t think it will very quickly, and people have a right to be disappointed in that.”
But all isn’t lost, Hinden says. Boomers looking to salvage a financial future from this mess will need to adjust their plans, possibly pushing back their retirement date by a few years, and start saving aggressively to make up for lost interest income.
“Once people are aware of their situation they’re going to have to find ways to cope as they can,” Hinden explains. “I don’t think there’s any immediate help coming, except maybe for housing, but the interest rate problem is very real. Hopefully by being active and alert and careful in their spending, people will, when they set up their retirement budgets, leave themselves as much leeway as possible, figuring that the amount of growth in their assets going forward is going to be pretty small.”
We reached out to the Baby Boomers in our Yahoo! Contributor Network community to hear about their own personal financial regrets. Several of their stories are below.
Why Didn’t I Save for Retirement?
“I entered into adulthood and even had a family without ever hearing terms such as ‘401(k)’ and had no idea how to plan for my future financially. Worse yet is that I am college educated but still had no financial knowledge. I did not know which way to turn to find out anything about financially preparing for later life, so I didn't.
“As some Baby Boomers settle into an enjoyable retirement, I am one of the other Baby Boomers. There is no retirement for me, not even a burial plan. For Baby Boomers like myself who followed that popular song of the mid-1960s, ‘Let's Live for Today’ by the Grass Roots, what a mistake it may have been to let the title be a motto, only living for ‘today.’ I learned all too late that if you do not take the necessary steps to learn about financial planning as early as possible, it can be a disaster that will undoubtedly be regretted.” -- Donna Hicks
I Squandered My Intellectual Capital
“In 1989, my husband and I became parents. In my typical, all-or-nothing fashion, I embraced motherhood with gusto. My husband became the breadwinner while I cared for our children at home. By 2001, we had six children. For all those years, I did nothing to maintain my contact with the business world. I took no classes to update my programming skills or to maintain my other technical skills. I enjoyed nursing babies, teaching preschoolers to read, sewing clothes for the family, and even canning all summer long. I was living my ‘Little House on the Prairie’ dream. I gave no thought to what I would do after the children were grown.
“When our youngest child entered school, I had to build a new resume from scratch. I earned a master's degree in library science, hoping to land a position as an academic librarian at one of the many colleges in my city. I would have been better off if I had invested some time and money in continuing to take actuarial exams after I left the workforce or in pursuing an MBA in the evenings while I worked in Chicago. Instead, I waited too long to earn a low-value degree in a declining job market.” -- Kimberly Schimmel
I Should Never Have Taken That Early Withdrawal From My Pension Fund
“As is common for so many women, I was trapped in an abusive relationship. Abusive types tend to control significant others by restricting how much they can earn and save. I was no exception. By the time I left, I only had what I could carry. Adding to the drama, I was finishing a degree program with college bills attached. Consequently, I chose the only option I could fathom at the time, which was early withdrawal of the public pension I had earned as a teacher.
“To say I regret this decision is an understatement. Withdrawing funds from a pension is a taxable event, which results in reducing the payout amount significantly. Yes, withdrawing the funds helped me jump over my financial hurdle at the time. Nevertheless, considering the reduced amount I received and the loss of those retirement funds compared with what I had to do to replace them, it was a financial setback. Twenty-five years later, I still kick myself.” -- Rebecca Black
Credit Card Debt Nearly Ruined My Retirement
“For over a year recently, I lived off an unemployment check and my credit cards. I maxed them out trying to maintain my standard of living, started paying the minimum payments, and eventually could not afford to pay them at all. Creditors were calling daily and my good credit rating took a nosedive. All I wanted to do was ignore the situation and hope it would go away, but I eventually had to face the fact that I had brought this on myself with my careless money management. I knew I had to do something, but curbing my spending and following a budget was one of the hardest things I ever had to do.
“Today I consider myself lucky because I did eventually find another job. Although it was not a high paying one, at least it was an income and I was able to start digging my way out of the financial pit I had created. By sticking to a budget, I have managed to pay off over half of my credit card debt. The light at the end of the tunnel is getting a little brighter now, but I regret that the money I thought I would be putting away in my 50s to enjoy my golden years is now going toward making sure that I have enough to survive them. “ -- Karlene Trudell
We Should Have Never Sold Our Dream Home
“Fifteen years ago, I was offered a job of a lifetime. It required uprooting our newly started family and moving from Seattle to Cleveland. As hard as it was to make the decision to accept the job, the harder choice came later. My husband and I had saved for years and had designed and built our dream house. We were enjoying an up economy and our home's value skyrocketed.
“With the power of hindsight, do I regret the decisions of youth? Absolutely. I wish we would have recognized the uncertainty of a long-distance move and opted to become landlords and renters. It would have given us time to determine if our new city was a keeper, and it would have given us a beloved landing place when we decided to return. If we had listened to our hearts and understood the difference of the Seattle vs. Cleveland markets we would have retained our equity, and our retirement accounts.” -- Kelly Tweeddale
Health, Money and First Impressions
“Being 59 years old and not having a steady paycheck for over two years, I wish back in my young, accounting executive days I had paid more attention to my health than making money. Now, I can't make money because of my health. Currently, I'm managing my health, but money is tight. As far as first impressions go, that cane I walk with doesn't affect my mind and that accounting work I'm so good at isn't done with my feet. I think these are the first impressions that really should matter the most. “ -- Larry Gross
I Regret Our Fixer-Upper House Purchase
“My Baby Boomer husband and I, the quintessential tightwads, spent the first half of our marriage, through four kids, in a mobile home. We bought our first house in 2000 for $54,000. It was old, damaged and one step from getting condemned. Arguably, that's why it was a good deal. We both regret cutting ourselves too short on this home purchase.
“And funny, what was ostensibly a ‘cheap’ house, hasn't been that inexpensive. For all the headaches, we still have a $650 a month house payment. We've barely touched the principal, the first 13 years of payments going primarily to interest. We have just paid off our other debt and can now think about refinancing. But I'm tempted to skip it, sell and get a nice little apartment with all the conveniences I don't have now. This ‘investment’ hasn't proved to be all it was cracked up to be.” -- Marilisa Sachteleben
It Seemed Like the Rise of the Stock Market Was Never Going to End
“I was keeping almost all my assets in stocks. Then the crash came and I had no plan to implement limits for my losses. My 401(k) lost 75 percent of its value. Then the market tanked and I had no safe haven for my hard earned money. Added to these financial disasters, the value of our home plummeted, denying refinancing to try and save on our mortgage.
“My biggest mistake was not being more conservative and saving for emergencies. The tenet that you should have at least six months of emergency funds was sorely inaccurate. The latest economic downturn lasted longer for most of us. I needed a stable vehicle in tandem with my stock investments.” -- Hector Quiambao