Members of the Baby Boomer generation have been influenced by the generation that lived through the Great Depression and World War II. These people experienced hardship and sacrificed to survive two of the worst crises America has ever faced. They imparted a strong sense of thrift and common sense to their children who, despite having grown up at a time of comparative affluence in America, so internalized the lessons of their parents’ generation that many have passed up opportunities to enjoy life in favor of setting aside money for a rainy day.
It’s important to achieve a healthy sense of balance, especially when you have the wherewithal to enjoy life. It’s possible to be ready for financial emergencies while having some fun and enjoying the fruits of all those years of hard work. So how can we achieve a financially balanced retirement? Let’s find out.
Before You Get Started
Leading an exciting and carefree life might sound extremely tempting, but it’s always important to have your ducks in a row before kicking things into high gear. Your health insurance is one example. You might know you’re eligible for Medicare at 65, but you may not realize that it won’t cover everything, and there are many out-of-pocket expenses, including premium, co-pays, and deductibles. A Medigap supplement insurance policy can help you avoid being hit with huge medical bill. Keep in mind, however, that Medigap plans can’t offer drug coverage and you cannot have Medigap and an Advantage plan at the same time so research your options before you sign up. The more you know, the better prepared you’ll be to select the coverage that fits your needs.
Saving an emergency fund isn’t brain surgery. It can easily be done by setting aside a percentage of your salary (or some other set amount) to be automatically deposited into a high-yield savings account. Whatever amount you settle on, make sure it’s a sum you can handle, and look for opportunities to increase it as you go. Conventional wisdom says everyone should have three to six months of savings set aside in case of emergencies.
Bear in mind that you should also budget money for entertainment; for vacations, weekend trips, plays, sporting events, dinners out, and whatever you do that gives you joy. Don’t sacrifice self-care for savings if you’ve already got it taken care of.
Safeguarding The Family
Planning ahead also means preparing for end-of-life matters, including investing in life insurance. While you’re coming up with a savings plan, be sure to research the best way for you to set aside funds to pay for your funeral and other final expenses. Buying a life insurance plan can help take the guesswork out of how to make sure you’ve covered all your bases when it comes to saving money.
When you are gathering estimates, decide whether you want term or whole life. Whole life will stick with you until the end, and won’t cost you more even if you get sick. Term life is less expensive but you’ll have to re-qualify at a higher rate when the term runs out. If you need just enough to cover your funeral and a few outstanding debts, a final expenses policy, which is a lower-value whole life insurance plan, may be enough to keep your family from suffering a financial impact when the time comes.
Those people who go the other direction, who prefer to live life now and worry about tomorrow when it happens, need to find financial balance as well. In a 2013 study, 83 percent of American workers were stressed out about saving for retirement. Why not alleviate that stress by making some compromises when it comes to having fun?
For example, if you’re flying to a vacation destination or taking a cruise, what about driving instead? There are plenty of options for fun trips closer to home, which will make driving more doable and save you the cost of airfare or passage on a cruise ship for multiple family members.
If you have big plans in mind for the near future, sit down and chart out how you’ll make it happen. Outline what you’d like to do over the next three to five years. If you’re married or have a family, everyone should write down separate lists, which you can then use to narrow down the most popular and realistic choices, things you can realistically expect to do in the near future without breaking your budget or dipping into emergency savings. Working together, you can make healthy compromises that allow you to have some fun without carrying frugality too far.
Make It Work
Achieving true financial balance in your life is a very realistic goal, but it takes hard work, patience, and determination. It all hinges on the establishment of good savings habits, and enjoying the results of all that work and patience. The harder you work and the more you save, the sooner you can enjoy yourself, without looking over your shoulder worrying that bad habits from the past will catch up with you.
If you’re a Baby Boomer, there’s no reason to think you can’t carry on your parents’ legacy of savings and thrift without having some fun while you do. Once there’s enough set aside to handle financial emergencies without going deep into debt, it’s time to find ways to use income (responsibly) to enjoy life.