5 Burning Questions Boomers Have About Retirement in 2024
Written by
Gabrielle Olya
Edited by
Molly Sullivan
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Members of the boomer generation are either retired or on the cusp of retirement — but about half are not prepared for this milestone. According to Northwestern Mutual’s 2024 Planning & Progress Study, 51% of boomers said they are not prepared for retirement versus 49% who said that they are.
The study also asked boomers to share their most burning questions about retirement planning. Here’s a look at the top questions, plus, how a certified financial planner would answer them.
How Much Money Will I Need To Retire Comfortably?
Over one-third of boomers (34%) were not sure about how much money they should aim to have in their retirement nest egg.
“This wholly depends on a number of factors, including your lifestyle, and the cost of living and taxes in your state,” said Mark Wise, CFP, president and CEO of Wise Financial, Northwestern Mutual.
While there’s no one-size-fits-all answer, it may be useful to know the benchmark the average American is now using.
“The Planning & Progress Study finds that Americans estimate they’ll need $1.46 million to retire comfortably, a 15% jump over what they reported in 2023,” Wise said.
Is It Possible I Could Outlive My Savings?
Another common concern is outliving retirement savings, with 31% of boomers posing this burning question.
“It is possible, but you can help mitigate that risk with careful retirement planning,” Wise said. “Once you feel clear about what you want out of retirement, the next step is estimating how much that lifestyle will cost you over multiple decades. Sketch out your annual expenses, then run the numbers to set a realistic savings target.”
Wise said you might want to use the “4% rule” as a general guideline.
“The 4% rule has long been a go-to model for ensuring that you don’t outlive your savings, but it has its limitations,” he said. “If you choose to follow this method, you’ll withdraw 4% of your total retirement savings during your first year of retirement. After that, you’ll continue withdrawing that amount and a little extra to account for inflation.
“It essentially means that you could generate about $40,000 a year in retirement — with increases for inflation — for every million dollars you save.”
How Can I Plan For Potential Long-Term Care Needs?
Seventy percent of adults who live to age 65 will experience a long-term care event during their lifetime, according to the U.S. Department of Health and Human Services. Many boomers are aware that they should be financially planning for long-term care, but 28% don’t know how to do so.
“Aside from your personal assets and income, hybrid life and long-term care insurance can provide greater coverage for a long-term care event than a life insurance policy with an accelerated death benefit,” Wise said. “With this option, qualified long-term care expenses are initially reimbursed by first accessing the policy’s death benefit.
“Once the death benefit is used, you can access additional funds if you continue to be eligible to receive benefits,” he continued. “If you don’t end up needing these funds to cover long-term care, the death benefit value will remain intact, just like a traditional life insurance policy. It’s also a permanent product, so it can grow in cash value.”
You might also opt for long-term care insurance that is specifically designed to cover potential long-term care expenses.
“This solution may offer the most long-term care coverage for the lowest premium,” Wise said.
How Will Taxes Impact Me in Retirement?
Over one-quarter of boomers (28%) are concerned about the effect of taxes on their retirement income.
“In retirement, the impact of taxes can vary greatly depending on individual circumstances and where assets are located,” Wise said. “Regardless, effective tax planning is crucial to maximizing post-tax income and the value of your retirement savings.”
A smart retirement plan includes a plan for minimizing taxes.
“Understanding how different types of accounts are taxed and developing a distribution strategy can effectively minimize the overall amount and impact of taxes paid,” Wise said. “That should always be a key consideration in a holistic financial plan and factored into the projected success of the retirement plan.”
What If Inflation Rises When I’m Retired?
Another major concern is inflation, with 26% of boomers citing this as a top burning question.
“Inflation is an important concern to consider in retirement and when implementing a comprehensive financial plan,” Wise said. “There are always unexpected challenges, both economically and personally, that arise throughout a financial journey, which makes the ongoing discussion and updating of your financial plan that much more important.”
The best way to combat inflation is through diversification.
“Diversification as a strategy is key as many asset classes have historically performed very well during periods of high inflation,” Wise said. “A well-constructed financial plan should have the tools in place to remain adaptable and navigate rising inflation or other challenges that may arise during retirement.”
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