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Baby Boomers and Retirement Savings

Baby Boomers relying too much on Social Security

This aging demographic still hasn't shaken off the trauma of the 2008 financial crisis

If you talk to younger consumers about retirement, they more than likely will express doubts about Social Security being around when they stop working.

But if you talk to Baby Boomers, you are likely to hear they are counting on their benefits more and more.

A new study commissioned by the Bankers Life Center for a Secure Retirement (CSR) has found Boomers are just a little too reliant on Social Security, with 38% now saying the monthly check will likely be their primary ...

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    Years after financial crisis, many Boomers still struggling

    Financial plight puts a different spin on retirement plans

    The financial crisis, which deepened an existing recession, was a major blow to the U.S. economy.

    Since then, the nation has been on a slow path toward recovery. Today, many consumers are feeling a lot better than they did a few years ago. Baby Boomers, however, are among the least likely to feel that way.

    A study commissioned by the Bankers Life Center for a Secure Retirement found only 2% of middle income Boomers think the economy has fully recovered. Sixty-five percent don't think they have benefited at all from the recovery.

    And while nearly all the Boomers in the survey said they expect to retire one day, the study found a near universal adjustment to just what form retirement will take.

    Savings and earnings have fallen

    Here are a couple of reasons why: among the group saying it has not benefited from the recovery, more than half say their money in savings is less than before the crisis. Four out of ten say they are earning less money than they did a decade ago.

    Back then, 45% of middle income Boomers said they expected to have no debt in retirement, living in a home with no mortgage. Today, only 34% have that expectation.

    Boomers contemplating retirement are also planning to be more dependent on Social Security income. Ten years ago, 40% of Boomers said they expected their retirement savings would be their primary income source. Today, it's 34%.

    It's no surprise, then, that many Boomers appear to be reconsidering plans to stop working. The study shows nearly half of Boomers -- 48% -- plan to expect to hold down a full or part-time job after they reach retirement age. Before the financial crisis, it was just 35%.

    "Ten years ago, Baby Boomers had a clear vision of what a personally satisfying retirement looked like," said Scott Goldberg, president of Bankers Life. "But today, many are realizing they will not be as financially independent in retirement as they once expected."

    What to do

    If you are in your 50s or 60s, you don't have the luxury of a lot of time to build wealth for your golden years. But there are steps you can take now to become better prepared. They involve cutting expenses and increasing savings.

    First, AARP suggests defining what you want retirement to be. And be specific. If you want to travel, for example, think about what kind of travel. And it should go without saying, you need to be practical.

    Next, add up your assets, both financial and personal. If you have developed a skill over the years related to a favorite hobby, maybe that can be a source of income after you quit your day job.

    Decide when you want to start collecting Social Security. The monthly payments will be a lot larger if you can put it off until age 70.

    Analyze your budget, looking for ways to trim spending. Just a little each month can add up to growing savings.

    The financial crisis, which deepened an existing recession, was a major blow to the U.S. economy.Since then, the nation has been on a slow path toward...

    Retirement and debt usually don't mix

    But retiring with mortgage and other debt is becoming the norm

    Consumers nearing retirement age are often lectured by financial planners to be saving more for the years when they aren't working. That's sound advice, but it should be added that getting rid of debt before retirement is also a key step to financial security.

    That's rarely as simple as it sounds. Older consumers usually have mortgages, car payments and credit card debt, just like everyone else. Sometimes they are helping their children financially.

    One way to make retirement more affordable is to pay off the mortgage before you stop working. If you bought your home 30 years ago and never refinanced, that isn't a problem.

    Unfortunately very few people fall into that category. More likely homeowners refinanced several times – in the early 2000s to take out equity for other things – and more recently to lower interest rates.

    Mortgage debt

    With the slow recovery of the housing market, not only do many aging consumers not have much equity in their home, they are also early in the mortgage term. A recent AARP study shows that in recent years an increasing number of retirees still have mortgage debt.

    A study by TIAA Cref shows more seniors are going into debt – to themselves. Nearly one-third of Americans who take part in a retirement plan say they have borrowed money from their retirement account for non-retirement expenses.

    But the reasons for borrowing the money is interesting. The top reason given for the loan was to pay off other debt, including mortgages.

    For every retiree who is able to burn their mortgage papers there are hundreds more that will carry significant debt into their Golden Years.

    Becoming the norm

    According to researchers at the Michigan Retirement Research Center, older persons today may be much more likely to enter retirement age in debt compared to decades past.

    The percentage of consumers near retirement age having mortgage debt has risen by over 7 percentage points, from 41% in 1992 to 48% by 2008. The level of mortgage debt has also risen. The researchers say mortgage debt for near-retirees tripled between 1992 and 2008.

    TIAA Cref cites statistics from the Employee Benefit Research Institute showing that debt levels for families headed by people 75 or older more than doubled in the 3 years from 2007 to 2010, to over $27,000. But pre-retiree Boomers were carrying even more debt – more than $107,000 in 2010.

    Conflicting advice

    Should you pay your mortgage off early? Some financial advisors suggest it isn't always the best move, if the payments are manageable and you have a low, fixed-rate. After all, it provides a tax deduction.

    But that has to be measured against the cash flow benefit of adding $1000 or more a month to your budget because you aren't making a mortgage payment. There may be additional value in paying off a mortgage if you have savings earning little to no interest, given the current low interest rates.

    If debt appears to be a problem that will follow you into requirement, the TIAA Cref researchers say you might have to consider postponing retirement, especially if the income you expect to get from Social Security, pensions and savings won’t cover debt payments and other fixed expenses.

    If you’re struggling with credit card debt, they suggest waiting until you have a cash management plan you can stick to before leaving work.

    Consumers nearing retirement age are often lectured by financial planners to be saving more for the years when they aren't working. That's sound advice, bu...

    Half of older Americans have no retirement savings

    Social Security becomes an increasingly fragile lifeline

    As data continues to pile up about the financial condition of older Americans, one conclusion is becoming pretty clear. For millions of Americans, there probably won't be any retirement.

    At least, not a retirement that fits into the traditional meaning of the word. A new report (PDF) from the General Accountability Office (GAO) shows a disturbing number of Americans are approaching their retirement years with no savings and few, if any, assets.

    Their future may then depend on whatever income they can derive from continued employment and the increasingly fragile lifeline provided by Social Security.

    52% have no savings

    In a report produced as the request of Sen. Bernie Sanders (I-VT), the GAO found that 52% of U.S. households age 55 and older have no retirement savings, such as in a 401(k) plan or an IRA. Worse still, the agency found many older households without retirement savings have few other resources, such as a defined benefit pension, non-retirement savings or other assets.

    The older Americans who do have retirement savings are in much better shape because the GAO found they typically also have other financial resources, such as pensions, non-retirement savings and real assets like property.

    Among those who have some retirement savings, the median amount of those savings is about $104,000 for households age 55-64 and $148,000 for households age 65-74. GAO estimates that is the equivalent to an inflation-protected annuity of $310 and $649 per month, respectively.

    Relying on Social Security

    Social Security provides most of the income for about half of households age 65 and older. GAO says these benefits offer 2 primary advantages; they are monthly payments that continue until death and adjust each year to provide cost-of-living increases.

    But U.S. workers have been paying into Social Security at a much slower rate than retirees have been withdrawing it. As a result GAO says the Social Security trust fund is projected to run out of money in 2034.

    What happens then is anyone's guess but one option is to reduce payments to cover just 75% of benefits. Another is to increase the withholding of the FICA tax, as was done in 1983.

    The Social Security Administration reports that as of April 2015 the average Social Security benefit received by retirees was $1,333 a month.

    Unable to maintain lifestyle

    GAO said it reviewed a number of different surveys and studies about Americans' retirement savings pattern and found widely differing conclusions. But its analysis shows that at least one-third to two-thirds of workers will be unable to maintain their present lifestyle if and when they retire.

    Perhaps because of that, younger Baby Boomers say they plan to work longer than they previously assumed. Workers age 55 and older say they expect to retire later and a higher percentage plan to work during their traditional retirement years.

    For those who can keep working, that helps address the lack of savings. However, as the GAO report points out, about half of current retirees said they retired earlier than planned when health problems cropped up or when their employer downsized or went out of business.

    The GAO report says that suggests that many workers may be overestimating their future retirement income and their ability to accumulate future savings.  

    As data continues to pile up about the financial condition of older Americans, one conclusion is becoming pretty clear. For millions of Americans, there pr...

    Facing uncertain retirement? Don't panic

    The situation might not be as dire as you think

    It always happens. Conventional wisdom determines that some threat is inevitable, generating much fear and angst. Then someone comes along and says maybe things aren't so dire after all.

    It may be happening in the field of retirement planning. In recent years we've been warned that Americans aren't saving enough to support themselves in retirement.

    While we should all try to heed the advice to save, some are suggesting the fear is a bit overdone. Ben Steveman, writing in his Bloomberg personal finance blog “Ventured & Gained,” says fear is a poor motivator. Besides, he says, he may not be headed toward a “retirement apocalypse” after all.

    “Once retired, Americans will likely find it easier to plot out their budgets. Policymakers and retirement plan providers are working on ways for workers to convert savings into a stream of "lifetime income” that also makes planning simple,” Steveman writes. “While historically low interest rates mean annuities and longevity insurance are expensive now, they should become a better deal when rates inevitably rise.”

    Plenty to worry about

    Much of the current fear no doubt stems from the poor performance of the stock market in the first decade of the 21st century. Retirement plans heavily invested in stocks barely treaded water for years.

    Then along came 2009 and the terrifying plunge in the Dow Jones Industrial Average to below 7,000. While it is true that retirement savers who didn't panic but just rode out the sell-off enjoyed a sharp rebound after mid 2009, the fact remains that years of growth were lost.

    Another unsettling factor is how retirement has changed. In previous generations people retired at 65 and started drawing Social Security and a defined benefit pension. They were probably going to die at 70, so they didn't really have to worry about paying for a long retirement.

    Today, many retirees have tax-deferred retirement accounts that are finite. The money, supplemented by Social Security and other sources, has to last the rest of their lives. With people now routinely living into their 90s, that's a long time to stretch a dollar.

    There's still time

    Still, plenty of financial planners say it isn't as bleak as it has been painted. If you are 10 to 15 years away from retirement, you still have time to prepare and there is plenty of free help to advise you through the process.

    In 2012 AARP launched a website, Ready for Retirement, featuring planning tools and answers to the more than 11,000 questions AARP has received on the issue. It was a response to an AARP survey that found 65% of people believe they won't have enough to retire.

    “As pensions disappear for many American families, preparing for a successful retirement has become increasingly important, and AARP wants to ensure people have the tools they need to save for their futures,” Jean Setzfand, AARP Vice President for Financial Security said at the launch.

    More free help is available from the U.S. Department of Labor, which has published an online booklet to offer tips on taking control of your financial life. The important thing is to start now.

    “In those approximately 10 to 15 years, you will have time to put more of your paycheck to work in a retirement account,” the agency says. “It will grow, not only from your additional savings, but also from the 'miracle of compounding,' the world's greatest math discovery, according to everyone's favorite genius, Albert Einstein. This is the result of earnings from interest and from investments continually increasing the base amount.”

    Define retirement for yourself

    It's also important to define for yourself what retirement is going to be. If you hate your job you might not want to hear that you should continue working, but no one says you have to stay in the job you hate.

    What if you had a part-time job doing something you love? After age 66 you can earn money without it affecting your Social Security payments. Social Security, income from your investments and a regular paycheck might make for a comfortable retirement, as long as housing and medical expenses are under control.

    The take home from all of this, says Steveman, is not to be paralyzed by fear but to start planning and start saving right away.  

    It always happens. Conventional wisdom determines that some threat is inevitable, generating much fear and angst. Then someone comes along and says maybe t...

    Report: income inequality a factor in retirement savings

    Researchers say higher income Americans have saved a lot more

    Once upon a time the average American consumer worked at the same place for 30 or 40 years and retired with a modest pension and Social Security, enough to live out their days in relative comfort.

    That was before escalating medical costs, longer lifespans, and the wholesale replacement of defined pensions with individual retirement savings plans.

    A new report from the Economic Policy Institute (EPI) finds that an increasing number of Americans have saved little or nothing for retirement, and has focused on characteristics of savers.

    The study found that retirement wealth more than kept pace with incomes over the past 25 years. It nearly doubled as a share of personal disposable income between 1989 and 2013, with retirement account savings exceeding pension fund assets after 2012. While that seems to be a positive, the study notes that there is a distinct disparity among those who are saving and those who are not.

    Widening retirement gaps

    It suggests the shift from traditional pensions to individual savings has widened retirement gaps. High-income, white, college-educated, and married workers participate in defined-benefit pensions at a higher rate than other workers, but participation gaps are much larger under defined-contribution plans.

    For many groups—lower-income, black, Hispanic, non-college-educated, and unmarried Americans—the typical working-age family or individual has no savings at all in retirement accounts.

    “And for those who do have savings, the median balances in retirement accounts are very low,” the authors write.

    The report also finds that economic turmoil takes a toll on retirement savings. Much of the 401(k) era coincided with rising stock and housing prices that propped up family wealth measures even as the savings rate declined.

    This house of cards collapsed in 2000–2001 and again in 2007–2009. By 2013 most families were still feeling the impact from the financial crisis and Great Recession, reducing, if not eliminating, their ability to save for retirement.

    Younger consumers not saving

    At this point, the authors believe younger generations should be stepping up their retirement savings in defined-contribution plans. But while the retirement account savings of families approaching retirement grew before the financial crisis and Great Recession, those of younger families stayed flat.

    At this point, the report notes the much discussed income inequality extends to retirement savings. The rich have gotten better prepared while the poor continue to lose ground.

    “Participation in retirement savings plans is highly unequal across income groups,” the authors write. “In 2013, nearly nine in 10 families in the top income fifth had retirement account savings, compared with fewer than one in 10 families in the bottom income fifth.”

    The report says the disparity has grown in the last decade as the share of working-age families with retirement account savings declined for all except the top income group. It concludes that it may be normal for higher-income families to have more savings, but it is not normal for most families in the bottom half of the income distribution to have no retirement account savings at all. That, the authors say, is a serious policy failure.

    Once upon a time the average American consumer worked at the same place for 30 or 40 years and retired with a modest pension and Social Security, enough to...

    5 investment banks for baby boomers ready to sell their businesses

    Getting the right advice and support could mean not leaving money on the table

    You’ve lived the American dream, starting your own business from the ground up, building it into a thriving successful enterprise that has supported your family, provided a needed product or service and created jobs.

    Now that it’s time to retire, what do you do with the business?

    You have a number of options. Many business owners sell to current key employees. Others sell to a competing or complementary company.

    Regardless of the type of sale, many owners of “middle market” companies hire the services of an investment bank to facilitate a sale for the best price and on the best terms. There is no precise definition of a middle market company but it’s generally considered to be a business generating between $5 million and $1 billion in revenue per year.

    One of the most important things an investment bank will do is establish a value for the business. Setting the right price means selling it quickly without leaving money on the table.

    When entering into an agreement with one of the investment banks serving this sector, it is important to understand how it goes about its job and how it will analyze and help you establish a fair value for your business.

    Industry experts say personalities will be very important. A seller needs to be comfortable with the bank’s representatives and confident they will be able to deliver.

    There are many investment banks but we’re going to review 5 that may be ideally suited to help Baby Boomer business owners transition to retirement. They are Houlihan Lokey, Harris Williams, Baird, William Blair and Lazard Middle Market.

    Houlihan Lokey

    Houlihan Lokey, Inc., based in Los Angeles and founded in 1972, is one of the largest privately owned investment banks in the world. Its wide-ranging business includes advising large public, as well as closely held companies. It also provides services to institutions and government entities.

    It specializes in mergers and acquisitions (M&A), capital markets, restructuring, fairness opinions and valuations.

    Houlihan Lokey is known for assembling smart, talented teams. Its rigorous hiring practice tries to identify and employ quantitative thinkers who can devise creative solutions to clients’ problems.

    Global in its reach, Houlihan Lokey has more offices than you might expect for a middle market bank – throughout the U.S. as well as Europe and Asia. Its U.S. presence is evenly spread across the country.

    Most banks have specialties and Houlihan Lokey is highly experienced dealing with aerospace and defense, financial services, business services, energy, consumer food and retail, health care, media and telecommunications, real estate, hospitality, technology and transportation.

    Our experts say Houlihan Lokey is a good choice for owners of privately held or publicly traded companies, owners of family businesses, executives at any middle market business and representatives at private equity firms.

    Harris Williams

    Harris Williams was founded in 1991 by 2 Harvard Business School graduates and since 2005, has operated as a subsidiary of PNC Financial Services. Based in Richmond, Va., the firm has offices in San Francisco, Boston, Philadelphia, Cleveland, Minneapolis, London and Frankfurt.

    From the beginning the company built its reputation on its expertise in leveraged buyout (LBO) services. Because of this it has extensive connections to private equity sponsors.

    Harris Williams takes a team approach, setting up industry groups that focus on aerospace, defense and government, building products and materials, business services, consumer, energy and power, health care and life sciences, industrials, specialty distribution, technology, media and telecom and transportation and logistics.

    In one of its recent transactions, Harris Williams advised Health & Safety Institute, Inc. (HIS) on its sale to The Riverside Company. The firm deployed 2 of its teams to guide the transaction – Todd Morris, Andy Dion and Andrew Hewlett of the Healthcare & Life Sciences Group and Mike Wilkins of Harris Williams’ Technology, Media & Telecom Group.

    "We are thrilled to have represented HSI’s shareholders in this transaction,” Morris said. HSI’s history of innovation and outstanding product quality, customer service and dedication to helping save lives has positioned it for strong continued growth and success in partnership with Riverside."

    “HSI is well positioned to capitalize on training industry trends driving demand for its online and mobile products and services,” Wilkins said. "We expect to see additional growth and consolidation in the broader education and training markets.”

    Our experts suggest Harris Williams is a good fit for owners of both privately held and public companies, owners of family businesses, executives at any type of middle market business, representatives at private equity firms and family offices, and representatives of local governments and sovereigns.


    Baird is a major global middle market investment bank with a wide array of talent and a broad focus. It provides advisory, financing and restructuring services to publicly traded corporations, privately held and entrepreneur-owned companies, and private equity firms through an interconnected and highly specialized international team.

    Founded in 1919 as the securities department of First Wisconsin National Bank, the Milwaukee-based financial services firm today has offices on 3 continents, providing investment banking, capital markets, private equity, wealth management and asset management services to individuals, businesses, institutional investors and governments.

    Baird’s primary middle market investment banking offerings and focus are in equity raises, M&A and public finance. One of its most recent M&A transactions was when it advised Bad Daddy’s International LLC on its acquisition by Good Times Restaurants Inc.

    In 2007, Bad Daddy’s founders’ created an upscale burger concept with “simple foods prepared to high culinary standards.” Bad Daddy’s became known for its signature burgers, salads, appetizers and sandwiches paired with local craft microbrew beers and signature cocktails and has won many awards and accolades for its culinary creations.

    Bad Daddy’s, based in Charlotte, N.C., consists of seven company-owned restaurants and six franchised / licensed restaurants in North Carolina, South Carolina, Tennessee and Colorado.

    Good Times Restaurants Inc. operates Good Times Burgers & Frozen Custard, an upscale quick-service restaurant chain focused on fresh, high quality, all natural products, making it a good fit with Bad Daddy’s Burger Bar, a full service, “small box” better burger casual dining chain.

    Baird also specializes in equity financing. It recently completed a $249 million refinancing of P&L Development’s existing debt. PLD is a company that manufactures, packages and distributes over-the-counter pharmaceutical products and health care goods.

    Baird is often referred to a “one-stop  shop” investment bank because of the range of services it provides. Our experts say it is a good fit for many middle market business owners who can profit from Baird’s expertise.

    William Blair

    Founded in 1935, in the midst of the Great Depression, William Blair today is an employee-owned firm providing investment banking and other financial services from its Chicago base and offices in London, San Francisco, Tokyo, Liechtenstein and Zurich.

    Much like Baird, William Blair is thought of as a one-stop shop, whether a company is trying to raise equity or launch an initial public offering (IPO). It benefits from a stellar reputation among its peers, a result of rigorously protecting its brand.

    The company has deep ties into the private equity community which can benefit both it and sellers hoping to be acquired by a private equity firm. Its strategic investment in BDA, another international investment bank, gives Blair special access to Asia, a significant source of investment dollars.

    The investment bank’s focus is on consumer and retail, energy, financial services, health care, industrials, services and technology. Its advisory services include comprehensive sell- and buy-side advice for publicly traded and privately held companies. Its strength, the company says, is being able to identify the best transaction partners anywhere in the world, structure and negotiate transactions, and deliver the best outcomes for clients.

    It can facilitate financing through equity capital markets or by providing access to private equity, leveraged finance and debt capital markets.

    In early 2015 William Blair acted as the exclusive financial advisor to PowerPlan, Inc., a portfolio company of JMI Equity and TPG Growth, in connection with its sale to Thoma Bravo. The transaction closed in February.

    Blair said it positioned PowerPlan as the only enterprise software vendor capable of helping asset-centric businesses such as utilities and oil and gas pipelines optimize financial performance of fixed assets.

    “As the undisputed leader in a market with high barriers to entry and a strong growth profile, PowerPlan commanded strong interest from both private equity investors and strategic acquirers,” the bank said in a statement.

    Our experts say William Blair is an ideal fit for privately held corporations, owners of publicly traded companies,, owners of family held businesses, executives at any type of middle market business,, representatives at private equity firms and family offices.

    Lazard Middle Market

    Lazard Middle Market (Lazard MM) is the middle market arm of the elite boutique investment bank Lazard, founded in 1848. Lazard Middle Market focuses primarily on putting together deals in the U.S. It. has offices in Chicago, Charlotte, Houston, Minneapolis and New York.

    Lazard Middle Market is highly active in the area of M&A, making it a good choice for middle market firms that would like to be acquired. Because the bank works closely with private equity groups it is ideally placed to put buyers together with sellers.

    Like other banks, Lazard Middle Market has its areas of specialty: business services, education services and technology, financial services, food and consumer, healthcare and industrials. Senior bankers focus on specific industries, allowing them to use their insight into and understanding of the various business sector ds and key players.

    The bank tailors its services to meet the unique needs of mid-sized companies. It is able to provide the sophisticated services, global perspective and broad resources of Lazard, its parent.

    Our experts believe Lazard Middle Market is a good fit for owners of both privately held and publicly traded companies and executives at any type of middle market business. It could be especially advantageous for companies in the higher end of the middle market.  

    You’ve lived the American dream, starting your own business from the ground up, building it into a thriving successful enterprise...

    Housing costs weighing on Baby Boomers

    A survey shows that consumers worry more about putting a roof over their head as they age

    A number of recent surveys have found anxiety among Baby Boomers about retirement, primarily concerns about not having enough money.

    The NHP Foundation, a not-for-profit provider of affordable housing, has drilled a little deeper into those concerns. It says a poll of Americans aged 55 and older found the cost of putting a roof over their heads is a major issue.

    The survey found 30% of Boomers worry at least once a month that they won't be able to afford their home. About 42% of retired people in the survey say they worry about it at least once a day.

    While Millennials are known to have housing anxiety, caught between high rent and rising home prices, Boomers were thought to be more housing secure. But it turns out many Boomers who don't worry about their own housing costs do worry about those of their adult children.

    Multi-generational anxiety

    "The anxiety is now multi-generational," said NHPF CEO Richard Burns. "So we are working today to increase our stock of affordable housing to ensure that this and future generations are able to afford desirable places to live."

    Previous NHP surveys have uncovered other concerns about housing affordability. One discovered that up to 75% of the U.S. population is worried at any given moment about losing their home. One that focused exclusively on Millennials found 76% of the younger generation had made compromises to secure affordable housing.

    "These findings underscore the urgency to make housing affordability solutions a priority in America, especially for those most vulnerable," said Ali Solis, President and CEO of MakeRoom, a national renter's advocacy group.

    As you might expect, there are geographical differences in the level of housing worries. There is less concern in the Midwest, where real estate prices are lower. There's more concern in the South, where incomes are lower, and in the Northeast, where real estate is more expensive.

    A number of recent surveys have found anxiety among Baby Boomers about retirement, primarily concerns about not having enough money.The NHP Foundation,...

    The question you didn't hear asked at last night's debate

    AARP pushes candidates to talk about Social Security

    When Democrat Hillary Clinton and Republican Donald Trump squared off in Monday night's first presidential debate, there was no shortage of fireworks.

    But while the 90 minutes was long on entertainment value, some commentators observed that it was short on substance. In particular, AARP Senior Vice President John Hishta said there was one issue, affecting just about everyone in the country, that was not raised.

    "In this issueless campaign, the debate was the best chance for voters to get real answers on how the presidential candidates would keep Social Security strong for future generations,” Hishta said. “If our leaders don't commit to act, future retirees could lose up to $10,000 per year.”

    Hishta says Social Security faces a big revenue shortfall in the future. Under current law, if nothing is done, there will be cuts across the board for Social Security in 2034.

    If the political climate does not change, it's hard to see how anything gets done. Congress can simply let the cuts go into effect and individual members don't have to take any action that would be unpopular among one constituency or another.

    Trying to raise the issue

    For its part, AARP is trying to get the issue on the political radar screen. In spite of recent polling, which shows support for more focus on the issue, AARP complains that Social Security has been largely ignored in the election.

    It points to an AARP survey of Baby Boomer women that found 71% want the government to address Social Security immediately and more than two-thirds say have heard nothing about the candidates' plans.

    "Americans who are working hard and paying into Social Security were the real losers at tonight's debate," Hishta said.

    Hishta said AARP will step up pressure to have moderators in the remaining two debates at least bring up the issue.

    Both presidential candidates have, in fact, addressed Social Security on their campaigns. On her website, Clinton says the biggest threat to Social Security is from Republicans. She supports an expansion of benefits, to be paid for by increasing contributions from upper income recipients.

    Trump has said in speeches that he does not support any cuts to Social Security or Medicare. In a statement to AARP, Trump said the best way to preserve those benefits is to grow the economy.

    When Democrat Hillary Clinton and Republican Donald Trump squared off in Monday night's first presidential debate, there was no shortage of fireworks.B...

    What can a young person do to start saving for retirement?

    Author Michelle Perry Higgins offers money-saving tips for young people

    AARP, formerly known as the American Association of Retired Persons, and Young Invincibles recently hosted an event called "Cheers to Your Future: A Happy Hour on Millennials’ Economic Outlook" in support of “Secure Choice” -- a legislation that would give working New Yorkers of every age the option to save at work via payroll deduction.

    The legislation could be a positive step towards helping Millennials save for retirement. Compared to earlier generations, Millennials haven’t had it so easy when it comes to saving for retirement; a nationwide survey showed that Millennials have less wealth overall than earlier generations, and over half of low-income Millennials lack access to workplace retirement savings programs.

    Savings plans like Secure Choice can go a long way towards helping an individual become self-reliant in retirement. But what other steps might a young person take to help them prepare for retirement?

    To answer this question, we spoke with Michelle Perry Higgins, Principle and financial planner at California Financial Advisors, San Ramon, Calif. She advises young people to learn to balance the funds coming in so they don’t go out too quickly.

    Visualize buckets

    “You might be in awe of your paycheck and ecstatic to have money coming in regularly,” says Higgins, “But be smart with your money.”

    She recommends visualizing various buckets: one for retirement, one for emergency reserves, one to pay down debt, and one for day-to-day expenses (yes, including some fun!). Keeping these buckets full can help ensure funds stay balanced -- which may also help you resist the urge to splurge while out shopping.

    “Remember,” says Higgins, “Budgets are sexy. Budgets are cool. Budgets breed confidence and self-respect.” Buying a new pair of shoes may produce momentary happiness, but your self-respect will be shot if you can’t make rent because you splurged on the shoes.

    20% for retirement

    Higgins also recommends saving 20% of your income for retirement. Even though retirement may feel like a million years away, it’s a mistake to think, “I just graduated. I’ve got plenty of time,” says Higgins.

    “Be savvier than that,” she says. "Once you get in the habit of saving 20% of your income for retirement, you’ll never miss the money."

    You can also check and see if your employer offers a retirement plan (some will even match a percentage of your contribution). It’s a painless way to save, says Higgins, because the money is deducted directly from your paycheck.

    Once a year, Higgins recommends checking in with a fee-based financial planner. With clear goals in place, you’ll never question your financial position.

    More money-saving tips for young people can be found in her book, "College Poor No More! 100 $avings Tips for College Students."

    AARP, formerly known as the American Association of Retired Persons, and Young Invincibles recently hosted an event called "Cheers to Your Future: A Happy ...

    For retirees, annuities are earning new respect

    But ask a lot of questions before you commit

    In the world of financial services, an annuity is about as boring as it gets. You invest money with an insurance company then get a steady stream of income until you die.

    For many, it has the appeal of a defined benefit pension, which in today's world has gone the way of the dodo bird. For seniors worried about having their money last through retirement, safe from market gyrations, annuities have started to look pretty attractive.

    Here's how most annuities work: a number of people buy the product from an insurance company, which sends them a monthly check until they die. Some people will die sooner than others. You're betting you'll live longer while the insurance company, which is an expert in the actuarial tables, is taking the other side of that bet.

    While most financial planners will point out that the return on an annuities is quite a bit less than other financial instruments, many retirees frankly don't care. After the 2008 financial crisis, they are looking for guarantees – at least as much of a guarantee that the financial services industry can offer. According to an insurance newsletter, sales of most annuity product types enjoyed double-digit growth rates in 2013.

    Consider the source

    Before buying an annuity it is important ask and answer a few questions. For starters, where are you getting your information about the annuity you are considering? If it is from the insurance company selling it, it's best to look for a second opinion.

    Annuities are very profitable products for insurance companies. Not that there's anything wrong with that, but you should understand the person trying to selling you this product has a very strong incentive to get you to sign on the dotted line.

    If you have a spouse you will probably consider an annuity with survivor benefits. That means if you die first, you spouse will continue to receive income for the rest of his or her life.

    Not without risk

    Doing so, however, entails some risk. An annuity with survivor benefits will pay less income each month than one without these benefits. The insurance company must plan for payments until two people die, not one, so the monthly payout is less.

    And what happens if your designated survivor dies first? You continue to receive the reduced monthly payout from the annuity, but as John Grobe, a financial consultant specializing in federal government retirees, points out, the money withheld to care for your beneficiary was essentially wasted.

    In addition to an annuity with survivor benefits, there are immediate annuities, fixed annuities, variable annuities and equity indexed annuities. An immediate annuity, in which you pay in a lump sum of cash in return for a monthly check, is about the simplest, and according to Certified Financial Planner (CFP) Tim Maurer, probably the best for the largest number of people.

    Best of the bunch?

    “For Americans who will not be retiring with a meaningful stream of pension income, immediate annuities offer that potential,” Maurer wrote in an article for “Because an immediate annuity is purposefully consuming both interest and principal to create an income stream, the individual distributions are likely to be higher than anyone could justify taking from a balanced portfolio of investments, where maintenance of the principal balance is often the goal.”

    Maurer is least impressed with the equity indexed annuity, which he says is tied in to the rise in the stock market but somehow, without the downside risk. He's not alone in his skepticism.

    Wes Moss, a CFP who writes for the Atlanta Journal-Constitution, cautions consumers these products are being sold with commercials describing them as “can't lose” investments. What you should know, he writes, is that you're locking your money up for 10 to 15 years while receiving a rather anemic return – in the neighborhood of 2.5%.

    “If those annuity owners had invested wisely and consistently in a balanced S&P 500 and government bond market blend, exposing themselves to some risk, their potential upside for that 25-year period was considerably higher, ranging from 6.5 to 7 percent per year,” he writes.

    All this may be true, but it is also clear that for many consumers approaching and entering retirement, economic turbulence in recent years has virtually eliminated their appetite for risk. However, before making any financial decision that commits you long-term, it's a good idea to talk with a trusted and objective financial advisor.

    In the world of financial services, an annuity is about as boring as it gets. You invest money with an insurance company then get a steady stream of income...

    Why it may be important to improve your financial skills in retirement

    Managing retirement funds may be more challenging than saving them

    Sometime in the early 1990s there was a change in the American workplace. Companies began phasing out their defined pension plans for employees and began phasing in employee-directed retirement savings plans, most notably the 401(k).

    The change had advantages and drawbacks. The advantage is that financially-savvy employees could decide how their retirement funds were managed and choose how much risk they were willing to tolerate. The downside was that not all employees were financially-savvy.

    Instead of receiving a set benefit check from their employer's pension fund for the rest of their lives, most retirees now have to figure out how to make their retirement savings last. Some, admittedly, have a much more challenging task as surveys show an alarming number of near-retirees have put away far too little for their golden years.

    Not enough savings

    A 2011 survey by Wells Fargo found a majority of middle class Americans – 53% -- say they “need to significantly cut back on spending today to save for retirement.” Americans have saved, on average, only seven percent of their desired retirement nest egg– a median of $25,000 in retirement savings vs. a median retirement goal of $350,000. Three in ten people in their 60s have saved less than $25,000 for retirement, possibly indicating they will rely heavily on Social Security.

    For those who have managed to save a retirement nest egg, the challenge of managing it in retirement may be much greater than the challenge of saving. To produce income the funds need to be put to work. But investing – anything beyond bank CDs – involves risk. As people reach retirement they tend to be less tolerant of risk.

    "Generating retirement income is comparable to that of a NASA engineer trying to land a spaceship on Pluto," said Eleanor Blayney, consumer advocate at the Certified Financial Planner Board of Standards. "Everything may be optimized and perfectly calculated to give the highest probability of success, but without mid-course corrections along the way, the likelihood of achieving the goal – of landing the ship or generating enough income to live on during retirement – is very low."

    Tough questions

    Blayney says there are a number of questions retirees and near-retirees need to be asking themselves. For example, do you have a retirement spending plan? It's not just what you save – but the amount you spend, and the types of those expenses – that will determine whether you will have enough to live on in retirement.

    The questions get harder from there. Next, you have to decide how to invest your savings and how to spread those investments around and here you have to be both smart and careful. Blayney says just because you need income in retirement does not mean it's time to load up on fixed income or high-yield securities. A sizeable allocation to growth assets is as important as ever, she maintains.

    Once the funds are allocated, you can't just forget it. When you are invested you must pay attention to the economy as well as the market and be ready to make course corrections when conditions dictate.

    If that weren't enough retirees have to decide how and when to withdraw funds from a tax-deferred savings account when the law says you must start making withdrawals and paying taxes.

    On-going decision making

    "The reality is that generating retirement income requires ongoing decision-making over the life of the retiree and there is no one solution or product that will be good for the duration," Blayney said.

    If you are short of your savings goal the important thing is not to panic because that's usually when people make mistakes. One of the biggest mistakes is to plunge into a questionable investment – or outright scam – because it's promoter promises big returns.

    The risk-to-reward ratio is very real. An investment with a high reward always carries a higher risk. The reason a CD is about the lowest return one can get is there is no risk.

    The move from defined benefit pensions to self-managed retirement accounts essentially told employees, “you're on your own when it comes to your retirement planning.” For some that has worked out just fine. But it's a simple fact that not everyone has the ability or the willingness to take on that task.

    It's best, then, for those people making a retirement plan to seek the advice and assistance of a trusted financial advisor, not just to maximize retirement saving during their working years but devising a plan for making the money last.

    Sometime in the early 1990s there was a change in the American workplace. Companies began phasing out their defined pension plans for employees and began p...

    Five Steps to a More Financially Secure Retirement

    A balanced portfolio and reduced spending may provide the edge you need

    Lots of baby boomers are nervous about retirement. The Great Recession took a heavy toll on many investments and former financial goals don't seem as attainable in some cases.

    Eleanor Blayney, consumer advocate for the Certified Financial Planner (CFP) Board of Standards, says retirees and prospective retirees need a plan to spend their savings wisely while maintaining assets that grow and generate income.

    "Today, many Americans are on their own when it comes to saving -- and then spending -- their retirement income," Blayney said. "The majority of Americans will have to learn how to generate income using assets and investments they themselves have set aside in their retirement plans."

    That means retirees need to create a financial plan that continues to produce income throughout their retirement. It's what Blayney calls "creating your own paycheck."

    There are other steps she recommends to help establish a retirement that will be financially secure.

    Timing is everything

    The point when you start taking income from your retirement account can make a huge difference. Withdrawals from a portfolio during a bad investment market may diminish the sustainability of those savings by several years. In cases of bear markets, those able to delay retirement, and continue earning income rather than consuming assets, are in a much better position to avoid running out of money during their lifetimes.

    Conservative can be costly

    Being overly safe, investing only in bonds or annuities, can end up hurting you in the long run. For most retirees, a healthy allocation to investments that will grow over time, rather than those that promise regular income, will pay off. Dividend stocks are good, but must be closely monitored and portfolios adjusted. Bonds are more predictable but not without risk. As a balance, investing in equities or other assets that are likely to increase in value can provide added security. According to Blayney, it's simplistic to think that investments that pay interest or dividends are safe, whereas growth stocks are not.

    Finding the right withdrawal rate

    Generally speaking, there is a consensus that a four percent annual withdrawal rate -- defined as the highest yearly payout from an investment portfolio that will not deplete the portfolio over a given period -- is a reasonable payout over the life expectancy of most retirees. However, retirees should adjust this rate in certain situations. When an investment portfolio is doing well, or when there are large expenses, perhaps for medical costs, a higher rate may be warranted or necessary.

    Don't be afraid to spend capital from a retirement portfolio. Traditional IRAs, 401(k)s, 403(b)s, and self-employed plans are structured, under the tax laws, to be depleted over our lifetimes. Retirees are penalized if they fail to take principal from these accounts at a certain age. Many retirees find the prospect of spending down these accounts very upsetting, when, in fact, doing so under the guidance of a CFP professional can result in a far more comfortable and secure retirement.

    Understand your tax obligations

    Most retirement funds are tax deferred, so that you don't start paying taxes until you withdraw money. Tax rates help determine acceptable savings withdrawals, and utilizing both taxable and tax-deferred accounts appropriately can help control the amount of taxes owed in any given year. Withdrawing from these two types of accounts can be critical to sustaining a retirement portfolio.

    Cut expenses

    This may be one of the more overlooked aspects of a successful retirement. If you can downsize so that you don't require as much money each month, you don't need as much retirement income. The best place to save is probably with housing. If you are still making a mortgage payment, for example, consider taking your equity and moving to a smaller home -- preferably one you can purchase for cash. If you are considering the purchase of a condo, don't forget that most condos have pretty steep monthly homeowners association dues.

    According to Blayney, spending matters more than investments. She notes the amount of fixed income in a portfolio could vary from approximately 35 to 65 percent without significantly changing sustainable withdrawal rates. This suggests retirees should focus primarily on expense management in retirement as the most effective way to ensure that their resources will last.

    "Taxes, timing and spending are what matters most in creating income in retirement," says Blayney.

    Lots of baby boomers are nervous about retirement. The Great Recession took a heavy toll on many investments and former financial goals don't seem as attai...