As preparing for retirement becomes an increasingly complicated picture for Americans, one startup wants to help Baby Boomers find peace of mind as they sort out their financial future.
Kindur — a startup created by a seventeen-year JPMorgan Chase (JPM) veteran — creates personalized retirement plans by accounting for factors like insurance, Social Security, and health-care costs. The company can even combine a client's income sources into a regular retirement paycheck.
According to Kindur’s data, over 50% of Americans are afraid of running out of money in retirement. Although more than 17 million baby boomers have successfully saved for retirement, the retirement crisis persists as costs and life expectancy grow.
“What's challenging for this generation of boomers is their retirement looks completely different than their parents,” CEO and founder Rhian Horgan told YFi PM.
“So when they started saving, they weren't expecting to live 30 years at retirement,” Horgan continued. “They were probably expecting to live 15 or 20 years. And they also weren't expecting to spend $280,000 on health care over the course of retirement.”
Kindur claims that the American retirement crisis is largely driven by complicated regulations, soaring healthcare costs, the transition from pensions to 401(K)s, and improved longevity.
“To figure out Social Security today if you're a baby boomer, you've got to go to Barnes & Noble and buy a 300-page book to learn the rules, which is wild,” Horgan said.
She tells her clients that as you prepare to save for your future, there’s a number of places to pay attention to.
“If you're a couple years away from retirement, it's really making sure that all those old accounts are consolidated and then you're not paying really high mutual-fund fees,” Horgan told Yahoo Finance.
“We all think about millennials having new jobs every couple years, but the average baby boomer had six different jobs over the course of retirement, so they probably have six different IRAs or 401(k) accounts,” she added.
Taxes are also a concern, Horgan said, given the multiplicity of retirement accounts and how they get taxed.
“There's a ton of hidden taxes, and a lot of it comes down to actually taking money out of your accounts. So if you think about the boomer with these different accounts, they likely have a Roth, a traditional IRA [individual retirement account], and a taxable account,” she said.
Depending on which type of fund is being used, hidden taxes can cost a $1 million nest egg as much as $61,000 if they tap the money in those accounts, she explained.
“These are really high-consequence decisions. You have one chance to make your Social Security election, and you don't get a redo,” Horgan warned.
“So how many decisions do you have in life that you never get a redo? Very few...Choose wisely,” she said.
Chelsea Lombardo is a production assistant for Yahoo Finance. You can find more of her work here.