According to John Rhoads, a partner with Rhoads Grunden Lucca Capital Management, a Dallas-based fee-only money management firm, baby boomers have their work cut out for them when approaching retirement.

Rhoads, who age-wise is betwixt and between boomers and their parents, has worked with both generations. "[Boomers’] parents lived through the Depression," he says. "They know how precious money is. They don’t want to lose the principal, but [would] rather live off of interest."

The apples have fallen so far from the tree that they’re rolling downhill. "The boomers have a much more carefree attitude," Rhoads says. "They’ve never seen a world war or depression. The only thing they’ve experienced is a limited oil embargo." In addition to this more carefree attitude, many boomers are inheriting money from their more careful parents, adding to their relaxed approach to retirement finances.

"The number-one financial problem for boomers is that they’re living longer," Rhoads says. "If I’m working with somebody active and healthy at age 55, chances are they’ll be my client until they’re 90." Add a long life span to a life of less-than-careful financial planning, and the results can be trouble when the income stream stops. "What I find happening with the new generation is that they have unrealistic dreams for which they don’t have the money. They risk their future to satisfy the present," he says.

Rhoads suggests the following steps to ensure satisfying both your present and your future – solid financial advice no matter what your retirement timetable.

1. Track your assets, and consolidate when possible. "Understand what your assets are and where they are," says Rhoads. Consider moving assets – including stocks, bonds, and mutual funds – to one discount broker, brokerage firm, or financial-services firm so that you have a single concise statement and thus are on top of what and where your resources are at all times. Or create your own filing system using a software program such as Quicken or Microsoft Money.
2. Set retirement goals. After you track how much money you have, figure out how much you’ll need by setting concrete goals. What do you want to do for the rest of your life: Travel around the world? Spend time with your family? Fly fish? Write the great American novel? "See what it would realistically cost to support your plan," Rhoads says. And make sure you have one. "The saddest thing is people who, up to this point, their career has been their life and now they feel lost," he says. "We also see the excitement of people who are free to do what they’ve been waiting their whole lives to do"

   Rhoads had one client, a former high-powered executive, who worked part-time helping customers at Radio Shack after retirement and loved it. "Life doesn’t stop when you stop working," Rhoads says. "In many ways, it just starts – if you have enough resources."

3. Make a budget. In order to have enough resources for your dreams, you have to start budgeting. "You need to be brutally honest about what it costs to live," says Rhoads. Many boomers, after a life lived on credit, come to retirement with debt. Your first step is to pay it off. Your next step is to create a reasonable budget and stick to it. "Life goes on," says Rhoads. "The only difference is that now you don’t have an income." You may consider seeking professional financial counseling at this point. Make sure you use a fee-only adviser, not a commissioned salesperson.
4. Continue to invest for growth. "Your money’s got to last, so at least part of it needs to be invested for long-term growth," says Rhoads. He recommends investing 25% to 50% in a growth-and-income or balanced mutual fund, depending on your age and other sources of income. Remember, an increased life span not only means supplementing the lost income stream, but also countering inflation, which has historically increased 4% annually.
5. Prepare for your heirs. Put in writing how you want your money distributed after your death. In addition to a will, which details the distribution of your money, prepare a durable power of attorney, which dictates who will manage your estate if you become disabled, and a medical power of attorney, which mandates who will make medical decisions for you if you can’t.

---