By FPA member Judy C. Hagar, CFP®

Last Updated: May 23, 2011

Many baby boomers are deciding to stay in the workforce longer than they had planned. According to a recent study, “the low savings rate and extensive liabilities of the boomers have left about two-thirds of them unprepared for retirement.”¹ The study concludes that, “Boomers can help mitigate the consequences by remaining in the workforce beyond the traditional retirement age.”

Older workers face unique issues. Government policies relating to insurance, Medicare, pensions, Social Security, and employment practices make it more complicated for businesses to employee older workers.

Here are some tips to help you manage these issues:

1. Stay healthy. Eat right, get enough sleep, and invest in a fitness program of some sort, even it it’s a brisk walk in the neighborhood. 
2. Review your health insurance. Many early retirees are caught in the gap between COBRA and Medicare. Staying in the workforce until age 65 just to keep your health insurance can be wise, but if you’re healthy, you might find a private policy for a few years won’t bankrupt you! Contact your state’s Department of Insurance to find out what private policies are available.
3. Review your disability protection. The number one reason boomers fail to complete their financial goals is disability. Protecting your income is important.
4. Buy long-term care insurance. Long-term illnesses can bankrupt your family. Medicare is not the answer. Medicare only pays a portion of the first 100 days of a long-term illness (not requiring hospital stay). After that, you are on your own. 
5. Consult with the Social Security office and your benefits department regarding your options for taking or delaying your Social Security benefit. Taxes play heavily into these decisions, so consult with your Certified Public Accountant (CPA) or tax accountant. 
6. Evaluate your life insurance during this period to protect those who are dependent on your income. Life insurance is an instant estate, replacing lost wealth if you die.
7. Don’t wait until your retire to do what you love. Take a class in cooking, painting, gardening, golf, whatever! Putting off your favorite activities will only make you resent working longer.
8. Make a difference. Whether it’s at your church, a school, hospital, fraternal association, the humane society or a homeless shelter, giving back feels good. And feeling good equates to good health.
9. Take shorter vacations. If you have always wanted to travel, continue to do so, but do it over long weekends. Or travel locally. “Stay-cations” are good for the soul and the budget.
10. Create a financial plan. The very best solution to a postponed retirement is a good financial plan. Discuss all of the above issues and more with a financial planner.

¹ The McKinsey Quarterly, “Why baby boomers will need to work longer”, by Eric D. Beinhocker, Diana Farrell, and Ezra Greenberg, Economic Studies, published November, 2008 by McKinsey & Company.

FPA member Judy C. Hagar, CFP®, is a partner with Wolters, Hagar & Pratt, Financial Planning, Inc., a Registered Investment Advisor, headquartered in San Diego, Calif. Her fee-based practice specializes in long range planning and investment management for small business owners and executives.