Yesterday’s CBTV show was entitled, “Financial Fireworks: When Your Financial Strategy “Blows Up” Right BEFORE Retirement!”
With close to 78 million baby boomers retiring over the next 20 years, it appears that many of them are finding that the two largest assets they were counting on have let them down in just the last three years…Being the equity in their home and the value of their 401-k or IRA.
As an example, expectations of the housing market recovery continue to falter, says RealtyTrac, the nation’s largest online service of foreclosed properties. Just six months ago, more Americans were optimistic that the worst of the housing crisis was behind us, or at least would be by the end of this year. But now more than 1 in 2 believe we still have a long road in front of us, and feel the recovery won’t happen until 2014 or later. The recent decline of home prices has been attributed to the loss of consumer confidence. Home values have fallen by at least 33% in 20 major U.S. cities across the country in the last five years. The decline has signaled a “double dip,” as home prices are now lower than the previous housing market low, set in April of 2009.
For boomers, the recession is redefining their retirement plans. Not only has the recession led to the Wall Street meltdown and significant drops in their 401(k) values, but high unemployment among boomers during what would have been their peak earning years, is crippling the expected size of their retirement nest egg. And, if they’re still carrying a mortgage, the drop in their home value and equity means that their home will likely not be a significant source of potential income or collateral in retirement. A home can only have financial “value” if there is equity.
I like to say that “reality” is not what we wish it would be, reality, is what it really is! And the “reality” for many Americans today is that retirement will not be what they envisioned for themselves without a “reality check” and a common sense financial plan to see them through the good times and bad times of our economy and financial markets.
So, my question to you today is: “What do you think are the 3 most important financial steps to ensuring you will live the life you planned for in retirement?
- Matt
