Markets may go bust, but baby-boomers on the run-in to retirement don’t have to … as long as they stick with the hard-working, innovative ethic that has always characterised this generation.
The encouragement comes from Barnard Jacobs Mellet Private Client Services (BJM PCS), a wealth company and adviser to high net worth individuals, including many clients engaged in pre-retirement planning.
“What should baby-boomers do after one of the biggest ever market corrections? This has become the key question for retirement planners,” says Tony Barrett, head of wealth management at BJM PCS.
“Hopefully, they completed a regular portfolio review ahead of last year’s steep dip in equity values. Prudent diversification may then have cushioned some of the blow. Unfortunately this was not always the case.”
Baby-boomers were born in the baby boom between 1946 and 1964, though demographers argue over precise dates.
In the West, they grew up in a period of relative affluence and enjoyed good nutrition, leading to characterisations as a wealthy and healthy generation. Recently, however, concerns have been raised over the susceptibility of baby-boomers to ‘diabesity’ – a combination of diabetes and obesity.
They are also known for rejecting or redefining traditional values and their ability to work hard and focus on personal goals.
However, single-minded focus could be a weakness, given recent shifts in the market, says Barrett.
“Typically, they work hard and keep the heads down,” he notes. “But this is a period when you have to lift your head, obtain good advice and review your options. They think ‘work hard and you’ll be rewarded’, but if you are over-exposed in key areas, the rewards built up over decades can deplete quite quickly.
“A baby-boomer born in 1946 looking to retire at 65 has only a two-year investment-horizon to work with. It is vital that needs and goals are clearly defined so a properly tailored plan can be developed.”
One factor working in their favour is their willingness to challenge norms.
This helps explain the eagerness of baby-boomers to pioneer new approaches to retirement and the active lifestyle choices often embraced by those entering their 60s.
“Traditional retirement – just quitting work and growing old gracefully – is being challenged,” says Barrett. “Baby-boomers are working longer, starting small businesses or seeking good remuneration as consultants.
“This is extremely beneficial for those who have seen their wealth eroded by poor market performance. Often, they recognise that significant wealth creation is a thing of the past. Instead, they look for optimum wealth preservation. By earning a supplementary income and refusing to access their retirement nest-egg they ensure a better lifestyle for longer.
“To prolong the wealth preservation phase they look to stay fit and healthy and focus on good nutrition. This is extremely positive – for their accumulated wealth and their general wellbeing.”
Markets may falter now and again, says Barrett, but baby-boomers don’t have to go into steep decline as long as they maintain their zest for life and stay economically active.
He adds: “In an economy constrained by skill shortages, the deferment of full retirement by talented baby-boomers could also be good for South Africa. Some of them are looking to recover from recent financial shocks. Thankfully, they still have a lot to offer.”