Welcome to Boomer411. We hope you will visit again. You can also subscribe to our RSS feed.

By Rita R. Robison, Consumer Specialist

In our Guest Blogs series today, consumer specialist Rita Robison (of Survive and Thrive Boomer Guide) talks about spending plans. You can find more information about Rita here on her Boomer411 trustee profile page. You can also read her previous post here.

If the word budget scares you, you may want to set up a spending plan instead, Consumer Reports magazine suggests in its August 2008 issue.

In the article, “Budgeting: Create a Spending Strategy,” these steps are offered to make your spending plan simple and painless. Read the entire article from Consumer reports here.

• Set goals
• Track expenses
• Plan for surprises
• Set priorities
• Fill the gaps
• Update regularly

For tracking your plan, a pad, pencil, and calculator will work. However, Consumer Reports says you could save time following your plan electronically.

Here are three free Web sites, which offer budgeting functions, that Consumer Reports’ staff reviewed.

• Buxfer (www.buxfer.com)
• Geezeo (www.geezeo.com)
• Yodlee MoneyCenter (www.yodlle.com)

The article advises consumers to be sure to check the privacy policies of sites before they sign up to determine how their information will be used.

So which is it? Is it a Silver Tsunami of retirement of Baby Boomers OR is it just a wave? Well, The recent report on BusinessWeekOnline attempts to address this question and tries to bust the myth supposedly common among many.

Did you know that even after the youngest Boomer reaches retirement age, the total number of Boomers retiring would not be 78 million, but more like a 46 million when adjusted for people that never worked and other factors? 

Read the article (watch the video interview) on BusinessWeek Online.

There have been numerous mentions, analyses of this interview in the blogosphere. I will only reference just a couple here.

The ‘50 + Digital’ posted the following in their blog. In this blog, Mark correctly points out that the real issue is not who is retired or not (although this is the real issue for those businesses spending big time banking on the upcoming wave of retirees), but it is the impending aging and the resulting health and other issues that eventually crop up.

Also, part of the reason many aren’t retiring is because of the lack of savings in their retirement accounts. One can not afford to retire on a $50,000 or $70,000 balance in their retirement accounts, unless they can count on a nice pension check or some other source of income. Believe it or not, this will affect the Gen X generation even more so than the Baby Boomers. But many years from now. This is so because, by the time Gen X’ers retire, pensions would have more or less disappeared and they can’t really count on Social Security benefits. So they have to basically pay for their retirement from their own savings. And as we all know, as Americans our saving habits are not very impressive. So one choice to afford the extended years of living is to not retire.

My dear friend and Boomer411 co-founder, Raj Setty has this great blog post on this subject. Regardless of how close or far you are from retiring, answering these questions that Raj asks in his blog can work as a checkpoint for your retirement preparedness…

1. When do you plan to retire?

2. How much money should you have to make this dream a reality?

3. How much money should you earn this year to reach the goal outlined in #2?

It takes some financial discipline to reasonably answer question #2 above. It helps to know how much you are spending on a monthly basis and which of these expenses you expect will continue into your retirement. Also, it is important to note that upon retirement one has more time to spare and might want to travel around or get involved in some other activities. Each of these cost a lot of money and these expenses need to be planned as well. Not to mention that the cost of healthcare increases drastically with one’s age. So take a deep breath and face up the facts. May be you are well prepared or may be you are not. But this is your life. So wouldn’t you rather make a well-educated move than a hasty one?

For more on this subject, read our interview with Catherine Kitcho, author of the book, ‘Happy About Being a Baby Boomer: Facing Our Newfound Longevity’. You might want to buy her book for more help on figuring out how much money do you really need to retire and live well.

The recent actions by the Federal Reserve to help shore up failing businesses and then a strong move to cut the interest rates by 75 basis points was cheered by the street with a big upswing in the market indices. It showed that the government and the fed is going to do everything in their power to help keep the economy from failing. But a day later, most of the gains from the prior day vanished into thin air.

Here is an interesting or rather thought-provoking analysis of these actions and what might (just might, but nobody knows for sure) be our way. This article attempts to summarize some of the various views on these actions and try to help make sense of all of this. As explained in this article, ‘Path Dependency’ hints that while avoiding a downright crash, this downturn may be rather prolonged. Time will only tell.

I am no expert on the economics or finance. But observing all these actions make me wonder, if it was this easy for the fed to pump in additional money to prop up failing parts of the system, wouldn’t most of the past troubles (recessions) be avoidable? If not, then by adding this additional liquidity, are we creating more systemic problems that would come back to haunt us in the long-term; while in the short term it may appear that the impending disaster is successfully avoided? Do these actions bode ill for the dollar value compared to other currencies? What would a weak dollar do to our companies and our economy in general?

We must think in these pragmatic terms and make sure we are not shooting ourselves in the foot before it’s too late.