Financial Planning.com is reporting that the majority of Baby Boomers and Generation Xers appear to be looking at their retirement years through rose-colored glasses. More than three in four feel confident they will have enough money to live comfortably in retirement, even though nearly 40% of Baby Boomers and about two-thirds of Gen Xers have less than $100,000 in retirement savings. Moreover, a worrisome percentage--21.7% of Baby Boomers and 27.8% of Gen Xers--has no retirement savings at all. The grim statistics are the highlights of a report released today by the Insured Retirement Institute.
It gets worse. Not only do they lack savings, they lack the skils and investment knowledge to address the issue, according to the report. The combination of the two - lack of funding and lack of skills to increase savings and earnings is a dangerous combination. The lack of funds increases the chances of attempting to hit a home run with each investment, which typically leads to disaster. In my decades of practice I have seen hundreds of investors who attempted to recoup losses, or increase gains, by speculative investments or risky trading strategies.
The problem is that some investors simply do not know better. Rather than attempt to get 100% or 1,000% return on an investment, get yourself to an financial advisor who knows more than you do, and who can calculate how much money you will need in retirement, and how to get there with as minimal amount of risk as possible.
Choosing an investment advisor is not an easy task, and there is no magic formula to find one either. Do some research, get referrals from friends, and do your homework. At the same time, educate yourself. When I came out of law school, knowing nothing about investing, a mentor told me to read two magazines every month - Money, which is written for the average person, and Financial Times, written for sophisticated investors and financial professionals. He told me that I would understand most of Money, and none of Financial Times, but to do it every month for a year.
I don't know that the average investor needs to read Financial Times, but I did, and my mentor was right. It took a while but I wound up with a practical understanding of investing and the markets, which has served me very well over my legal and investing career.
Take this statistic from the report seriously - slightly more than half (51.4%) of Baby Boomers and less than half (40.7%) of Generation Xers have tried to calculate how much savings they will need for a comfortable retirement.
You need to do that, and if you don't know how, you need to learn how, and you need an advisor to help you plot the investment course to get there.