Reverse

Originating: WhatÕ a Boomer to Do?

Written by Philip E. Lipp, as originally published in The Reverse Review.

I remember when I was in my 20s and 30s, I was always envious of my friends buying the latest gizmos, cars and vacations. My friends just felt like they had to have it and they had to have it now.

I marveled at all the bright, shiny objects they bought, mostly on credit, and wondered how in the world they were going to pay for it all. Well, now I am old enough to qualify for Medicare and I’ve got some latent wisdom as well. They couldn’t afford it then and they can’t afford it now.

It turns out that if you’re lucky, life might last a long time, and it’s expensive—even with the kids out of the house and on their own. The amount of money required to maintain ourselves comfortably for 20 to 30 years in retirement is staggering.

Unless one has a guaranteed pension plan from an entity that will not go bankrupt, most boomers will have to live on meager savings and Social Security. And God forbid something goes really wrong and in-home care is needed. Such expenses could be impossible to manage and, currently, Medicare doesn’t cover it.

So what’s a boomer to do? Well, there’s the possibility of selling all the “stuff” and moving to a less expensive city. While that might be an interesting change-of-pace idea, many folks would prefer to stay close to friends and family rather than starting all over again someplace new.

Downsizing is often mentioned as a possibility. But that creates a tricky problem with all the stuff that’s been accumulated. Downsizing is supposed to help free up cash by unloading the big family home and moving into a house or apartment built for two. That might help, but if you are a boomer with a penchant for living large and buying stuff, the additional money from the home sale could go quickly, and then what?

When I speak to my friends about what they plan to do, I get these blank stares. I guess when you have debt piled up and little in savings, what’s your choice? Some people ask me how that reverse mortgage thing works, and whether it could work for them. But what I find is that all too often, they have been using the equity in their homes for all sorts of things: swimming pools, credit card bills, college tuition.

So what’s a boomer to do?

The answer is going to be lousy-tasting medicine, but the only way to make it is to live below your means. This means stop using credit cards, even if you get double miles. Stop buying stuff, cut back on eating out—cut, cut and cut!

Get serious about paying down your mortgage and building up some equity. Start saving money and invest in your IRA again. Invest in some low-cost index funds. Start being smart about your finances and realistic about the cost of your future. Stop hoping that you will get an inheritance from your folks; it may never happen.

It’s time to grow up and face the music. Like the Rolling Stones said, “You can’t always get what you want, but if you try sometimes, you get what you need.”

If you turn over a new leaf, maybe you will be lucky enough to qualify for a reverse mortgage and be able to stay in the home you love. You know, the one with all that stuff in it.

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