Hard Road to Retirement for Junior Boomers

  • You are where?

    Retirement plans don't come with a GPS, so it's up to you to find your own bearings. After all, you can't figure out how to get somewhere until you first determine where you are.

    Start by checking your balances in all your retirement accounts. If you're married, you and your spouse should do a complete financial inventory together. Figure out things like when some benefits kick in, and what you'll get if you delay taking them. With Social Security and many pensions, it can make a big difference -- and a big difference in how you plan.

    Don't be surprised if you find out there's a tough road ahead. Unfortunately, most boomers have less than $150,000 in their 401(k) plans, according to the Employee Benefits Research Institute. That isn't nearly enough to get through a 20- to 30-year retirement.

    But no matter how good the GPS, actually getting to your desired destination is your responsibility. Here's what you'll need to do next.

  • No tooling around

    Someone who tries to hammer a nail with a pair of pliers learns a valuable lesson very quickly: The right tools make all the difference. And with some complicated projects, it's often good to get the help of a professional.

    It's the same with retirement planning. A trusted financial adviser or other professional may be needed to show you what your retirement planning options are, and how much sacrifice each option may require.

    But don't be afraid to take a do-it-yourself, or DIY, approach on some retirement planning projects. Bankrate's retirement planning calculator is a good place to start. The free online tool allows you to make projections on when you might retire, how much income you'll need and your required rate of retirement savings. You'll learn whether you need to save more or take other actions to improve your chances of reaching your retirement savings goals.

  • To Roth or not to Roth?

    Why did George Mallory want to explore Mount Everest? Because it's there. You should have the same attitude about Roth retirement plans.

    Roth IRAs, Roth 401(k)s and Roth 403(b)s -- self-funded contribution plans where you put your money in a retirement account -- don't provide the immediate tax-deductions that their non-Roth cousins do. That's because you pay taxes on Roth contributions now. But the benefit is, you don't pay taxes on Roth distributions when you take them in retirement.

    Just as Mallory never conquered Everest, however, a Roth account may not work for you. A lot depends on your age, your current tax bracket and your expected tax bracket later. Bankrate's online retirement calculators can help you crunch your numbers quickly.

    You don't necessarily have to decide right away. A traditional IRA can be converted to a Roth variety later, and under a new 2010 law your company plan may allow you to convert a standard 401(k) account to a Roth variety. But in either case, conversion may result in a hefty tax bill.

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