Dollars and cents: Financial Moves for Non-retiring Baby Boomers

By Mike Jones

If you’re in one of the early waves of baby boomers, you may know some retirees who are now enjoying a wide variety of activities — possibly even including a new career. And you, too, may now have some choices about how to spend your time. Should you stay at your current job? Should you retire altogether and travel or pursue hobbies? Or should you “retire” and then start a new job, do some consulting or even open your own business? While you may have choices on how to draw an income, you’ll also have some key issues to consider.

For starters, think about how your earnings might affect one source of retirement income: Social Security. As an early wave baby boomer, your “full retirement age,” from a Social Security standpoint, will be around 66. If you are younger than full retirement age during all of 2010, you will lose $1 from your benefits for each $2 you earn above $14,160. But if you reach your full retirement age during 2010, you’ll lose $1 from your benefits for each $3 you earn above $37,680 until the month you reach that age. (Keep in mind that these figures are for 2010 only; for changes in 2011 and succeeding years, you’ll want to check with the Social Security Administration.) Once you reach full retirement age, you can keep all your benefits, no matter how much you earn.

Deciding what to do about Social Security isn’t the only move you need to make if you work during your “normal” retirement years. You’ll also want to contribute as much as possible to your IRA, 401(k) or other employer-sponsored retirement plan. During these years, with your children grown and your mortgage possibly paid, you may have more investable income available — so take advantage of the opportunity.

You’ll also need to carefully review your portfolio to help ensure your investment mix is appropriate for your needs. To stay ahead of inflation, you’ll still need to invest for growth, but since you’re not that far from retirement, you’ll also want to control risk and volatility as much as possible.

Furthermore, you’re at the time of life when you may want to consider consolidating your investment and retirement accounts. If you have an IRA here, a 401(k) there and another account someplace else, you have a lot of paperwork to keep track of, both during the year and, especially, at tax time. But even more importantly, with all your accounts scattered, you might not be following one central, unifying investment approach — an approach that could help make it easier for you to pursue your long-term goals, including a comfortable retirement. By consolidating your accounts with one company, you can save time and possibly reduce administrative fees — while your accounts can work in harmony on your behalf.

This may be a good time to consult with a professional financial advisor — someone who can help you make those choices that can help provide you with the freedom to spend this next phase of your life doing as you please