January 04, 2006

Retirees need financial advice

Savings may not be as plentiful as some have suggested

By Joan D. Laguardia

Modern myth — or perhaps, stereotype — suggests baby boomers will be a generation of retirees with mega wads of money.

They're investing it, insuring it, inheriting it and earning it — often in dual-income households.

While financial planners in Southwest Florida suspect prospects for individual boomers are not as rosy as the big picture suggests, plenty of indicators suggest baby boomer retirees will offer a lucrative market for financial services.

For every boomer who's received an inheritance, there are several with only their home equity as a nest egg.

Those modest savings, combined with the uncertainty about Social Security and company pensions, point to the need for boomers to become savvier about investing, financial experts said.

People 50 and older earn nearly $2 trillion annually and own more than 70 percent of the financial assets in America, according to Ken Dychtwald, an oft-quoted psychologist and gerontologist turned marketing consultant in San Francisco.

Fort Myers boomer Teri Hansen sees it around her in Southwest Florida now, and she expects to see more of it as aging boomers relocate here.

"The boomers grew up in a different era, a more prosperous time" than the more traditional frugal retirees, said Hansen, 43.

Yet, while they own their homes and have retirement investment accounts their parents didn't have, they also carry more debt than their parents.

"With regard to baby boomers, I am a little less optimistic about the likelihood of their being more prepared than any previous generation for retirement," said J. Corey Vertich, a financial planner in Fort Myers. "Certainly, many baby boomers will have a great deal of financial success. It is just doubtful that their success will be as great as predicted."

Vertich said many boomers still carry a good amount of consumer debt, drive expensive cars and live a lifestyle they won't be able to support with retirement savings.

"Baby boomers are also more likely to try to manage their finances themselves rather than hiring a financial adviser like their parents do," he said. "Yes, some will inherit from their parents but most won't, and those who do often have to split that nest egg between one or more siblings."

Still, boomer retirees will come to Southwest Florida with financial reserves from the sale of their Northern homes, pension-plan payouts and corporate 401(k) plans to roll over into locally managed Individual Retirement Accounts or investment accounts.

"We have this influx of money in motion," said Fort Myers financial planner Jim Nolte.

The demand started quickly last year as the first wave of boomers turned 59.

At 59-and-a-half, they started withdrawing from 401(k)s and other tax-qualified retirement savings without paying a 10 percent penalty for early withdrawal.

There will be plenty of financial service workers to meet the needs of boomer retirees, and some of them will be boomer retirees themselves, said James Applegate, a financial planner in Fort Myers.

Financial services workers are expected to retire, move to Florida, and work enough to keep their licenses active. Brokers, especially, leave big investment firms and come here to start independent offices.

"We are going to see the boomers come down, and we will see a fantastic potential for the financial services market," said Nolte, co-manager and a vice president at A. G. Edwards & Sons.

"I can only look at our area to improve for financial services," he said.