Retiring early isn't what it used to be. With bolder aspirations and more challenging financial situations, a new generation faces different questions as baby boomers prepare to ditch the daily commute. So whether they want to spend their retirement years saving the world or simply traveling around it in their new motor yacht, boomers' financial savvy will spell the difference between success and failure in pursuing their dreams.
What's changed? Two things -- and the first, not surprisingly, boils down to money.
"Our parents had pension plans with defined benefits that were adjusted to keep pace with inflation -- they could just take their pensions and get up and go," says Jere Doyle, senior vice president at BNY Mellon, who works with affluent retirees.
But over the last quarter-century, the vast majority of employers have shifted the burden for saving for retirement to their employees, dumping on them all the work and all the headaches involved in building, managing and distributing retirement nest eggs. "Now all the risks are squarely in the laps of the baby boomers," Doyle adds.
The second change is lifestyle. "The reality is that when baby boomers retire, we are going to be relatively young and healthier than any other generation has ever been at this age," says Gail Buckner, retirement specialist at Franklin Templeton in San Mateo, Calif. "We will want to travel, to take up new hobbies or pastimes, perhaps to start a new business. All of these may mean that our cash needs actually rise."
The bigger your retirement dreams are -- or the sooner you want to jump off the career ladder -- the more attention you need to devote to financial planning.
Following are six smart tips for retiring not just sooner, but smarter as well.
1. Start as early as possible
The best way to avoid financial traps is to begin planning and saving as early as possible. That boosts the odds that you'll be able to retire whenever the moment feels right, instead of hanging on until the last possible moment or trying to knit together a combination of part-time, post-retirement jobs to bridge the gap between inadequate savings and your financial needs.