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Same Old, Same Old Won't Work For Today's Baby Boomers

Modern wealth management requires modern problem solving, especially as more baby boomers enter retirement.

By Rhian Horgan

Baby boomers are rapidly entering retirement. For these 78 million Americans entering a new phase of their lives, the challenges will be far more complex than those their own parents faced. The excitement of life after work can quickly be eclipsed by financial fears and concerns, even for those that have successfully saved over the course of their careers.

We need a new way of approaching modern retirement that meets the needs of this generation.

The shift from pensions to 401(k)s has exacerbated the risks that come with increased longevity, as many retirees are not aware of their risk profile and how to manage it. Retiring in your 60s and living into your 90s means you must take into account decades of drawing down a nest egg, likely including several years of expensive healthcare needs.

For those in or nearing retirement with investment accounts, today’s market volatility is another big question in a period of their lives where there are so many high-consequence decisions that need to be made. What can tangibly be done to improve the system?

We must make it more intuitive to make complex retirement decisions for people who often have more than ten different financial accounts. We can do this by providing comprehensive services that guide customers through all their retirement decisions in one centralized location.

The reality is that most baby boomers will have worked at several jobs over four or five decades in the workforce resulting in several employer-based retirement plans. Add on personal investment accounts and bank savings and you can see how quickly the number of accounts to factor into retirement adds up.

Another important solution is making it easier for consumers to rollover and consolidate retirement accounts, even while they’re still working. Unfortunately, in many cases it can be prohibitively difficult for consumers. By forcing them to jump through hurdles to move their money, like having to manually fax documents from one provider to another—in an age where finding a fax machine can be a challenge in itself—consumers are hurt by restricted choice in the market.

It’s also critical that we make sure that the right financial products, like simplified fixed annuities and low-cost ETFs are readily available for retirees where these products make sense on an individual basis. Baby boomers need investment products designed for today’s retirement which is vastly different than past generations.

In recent years, newer low-cost financial products have become much more accessible to younger generations looking to build wealth, but retirees are largely stuck with the same old one-size fits all products.

We need to make sure that families are protected. Often, partners and spouses naturally divide and conquer tasks over the course of their lives, which can result in one individual being the “financial manager.” However, holistic retirement planning requires that at the very least, both partners have critical baseline knowledge of where they stand financially and how much they can spend on a monthly basis in retirement.

The financial services industry today is not structured to manage the complexities of modern retirement in a comprehensive way, forcing retirees to turn to a handful of service providers for help, only to then jigsaw together advice from numerous sources to create a DIY plan.

DIYing a new garden or a bathroom remodel is one thing but making decisions about retirement without expert advice can be extremely costly and consequential over the decades that follow.

Even for those that have saved effectively, miscalculating your finances can result in having to rely on adult children or family for support. In the most unfortunate cases, it can mean choosing between critical costs, like food and medication—a situation no one wants to find themselves or a loved one in.

The industry today is disjointed, confusing and, in the worst cases, intentionally misleading. The good news is all these challenges are 100 percent solvable, but if we don’t get to work to find a solution that meets the needs of a modern retirement there will be serious economic consequences, for individuals and families, and the broader economy. 

Rhian Horgan is the founder and CEO of Kindur, a financial wellness platform helping baby boomers who are entering retirement.

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