6 tips for boomers preparing for retirement
March 19, 2018
Many dentists who are actively planning for retirement in the next 5 to 10 years are members of the baby-boomer generation. There are an estimated 76 million baby boomers1 in the United States.2 Since these boomers began working, the world has changed in many ways and some changes affect life in retirement. For example, there has been:
- A shift from employer-managed plans (pensions) to individual-managed plans (401(k)s).
- An improvement in medical care leading to a longer life expectancy.
- A drastic increase in the cost of health care.
- Several economic recessions that have caused professional and market losses. This fact is especially true for dentists, many of whom saw a significant decrease in revenue in the years after the 2008 great recession.
Since these changes have come about during their lifetimes, boomers may be less prepared for retirement than the generations that follow. In fact, approximately 35 million boomers do not have any retirement savings.3
In addition, if you own a practice, you may find it even more difficult to save for the future. A recent survey on self-employment and retirement reported that nearly two-thirds of the entrepreneurs cited "unpredictable cash flow as their biggest challenge."3
The baby boomer generation is defined as those born between 1946 and 1964. Therefore, depending on your age, there are different things that you may be able to do to make up for the lack of savings and be better prepared for a comfortable life in retirement.
If you are in the preretirement stage or recently retired, below are a few tips that you may find helpful:
1. The federal government allows those 50 years and older to save additional funds on a tax-advantaged basis in a retirement savings plan through catch-up contributions. Take full advantage of being able to save more money for retirement.
2. Social Security and Medicare regulations do change, and it's important to be educated about your options, since a misstep may cost you. A few age milestones to keep in mind are:
- 62 years — you may begin taking Social Security at a reduced payout amount rather than waiting until full retirement age.
- 65 years — you might qualify for Medicare benefits (depending on work history).
- 66 or 67 years (depending on birth year) — you may be able to apply for full Social Security retirement benefits.
- 70.5 years — you are required to begin taking required minimum distributions (RMDs) from tax-advantaged retirement accounts, such as 401(k)s and individual retirement accounts (IRAs).
3. Consider delaying retirement to build up your nest egg or plan for semiretirement or transition to a different career.
4. Review your current spending habits and look for ways to cut back on expenses to fund your retirement more effectively.
5. Pay close attention to your existing accounts and statements, evaluating where your savings are, how the money is allocated and any fees you may be paying.
6. Seek assistance from trusted financial professionals to better understand your options, including savings that offer tax advantages, remaining invested after taking RDMs and evaluating your practice in preparation for your transition.
To ensure that your retirement journey is a positive experience, there is a need to plan today. Make it a priority to think about your goals for the future and take steps to put money aside. Use these tips to help you get started on a strategy — no matter where you are in the nearly 20-year span of the boomer generation.
The ADA is here to help
Whether you're planning to maintain your practice or are preparing to wind down, the ADA offers retirement savings and distribution vehicles through AXA Equitable that can assist you in achieving your goals. With over 49 years of experience working with ADA members, AXA Equitable can help you review your options and offer you choices that will alleviate the burden of establishing and managing a retirement savings plan. It's one of the ways that the ADA makes it easier for you to focus on doing what you do best — deliver quality dental care, educate and mentor the next generation of dentists or run a practice — whatever your true passion is.
Call 1-800-523-1125 to speak with a retirement program specialist or visit ADAretire@axa.us.com to learn how you can start saving today.
Mr. LoPorto is senior director and client relationship manager at AXA Equitable. His article, written for general information purposes only, originally appeared in the Winter 2018 issue of Dental Practice Success. Read more at ADA.org/DPS.
This material does not constitute an offer or solicitation of any kind and is not intended, and should not be relied upon, as investment, tax, legal, or financial advice or services.The ADA Members Retirement Program contract form #5108 is funded by a group variable annuity contract issued and distributed by AXA Equitable Life Insurance Company, NY, NY. Annuities have limitations and restrictions. For costs and complete details contact a Retirement Program Specialist. AXA Equitable and its affiliates do not provide tax or legal advice. You should consult with your attorney and/or tax advisor before purchasing a contract.
1. Wikipedia. Baby boomers. Available at: https://en.wikipedia.org/wiki/Baby_boomers. Accessed January 3, 2018.
2. Collinson C; Transamerica Center for Retirement Studies. Perspectives on retirement: baby boomers, generation X, and millennials: 17th Annual Transamerica Retirement Survey of Workers. Available at: https://www.transamericacenter.org/docs/default-source/retirement-survey-of-workers/tcrs2016_sr_perspectives_on_retirement_baby_boomers_genx_millennials.pdf. Accessed January 3, 2018.
3. TD Ameritrade. Research & story ideas details: 2015 Self-Employed Survey. Available at: http://www.amtd.com/newsroom/research-and-story-ideas/research-and-story-ideas-details/2015/2015-Self-Employed-Survey/. Accessed January 3, 2018.