Anne Lester – Baby Boomers: How to save Smart Money and Retire on Time


Retirement planning is intimidating, and it’s hard to know where to start. Do you feel like you’re behind? Are you worried that it’s too late to save for retirement?

The fact is, there’s no one right answer when it comes to how much you need to save for retirement. Depending on your age, income, health, and other factors, you may need more or less than the average person.

If you’re not saving adequately for retirement, then you’re setting yourself up for a difficult future. You may have to work longer than you’d like or make significant cuts to your lifestyle in retirement.

If you are a baby boomer, did you save enough for retirement? The answer is dependent on what you mean by “adequate.”

Americans have traditionally relied on Social Security, private pensions, and personal savings to secure their retirement income. This system has served the seniors well Since World War II.

But the future is uncertain. The baby boomer generation has created a long-term imbalance in Social Security. Even if privatization is used, the solution must reduce benefits or raise taxes. Since workers can access their pension funds earlier, the future of private pensions is uncertain. Personal saving has been stagnant for over a decade. Savings account for retirement has virtually vanished.

Baby Boomers are retiring in large numbers. Many do not have enough saved for their retirement. Beyond a lack of planning, a key reason that Baby Boomers lack retirement savings are due to the 2008 financial crisis, the global pandemic as well as chronic low-interest rates.

With an increasing number of Americans retiring each year, there is a greater emphasis on retirement literacy. The time has come for retirees and pre-retirees to gain the knowledge they need to make sound financial decisions in retirement. It is critical to have a plan in place to ensure that you are on track for a secure retirement.

Today my guest is Anne Lester, a former portfolio manager and Head of Retirement Solutions for JPMorgan Asset Management’s Solutions group – retired in 2020.


Anne Lester is a former portfolio manager and Head of Retirement Solutions for JPMorgan Asset Management’s Solutions group – retired in 2020. She is on a mission to help Americans, particularly those in their 20s and 30s, understand that it is possible for them to achieve a happy retirement, ON THEIR TIME AND TARGET.

Anne continues to be a regular commentator on an array of retirement issues for consumers, industry, and public policy.

She is also working on a book that will help younger savers understand how to overcome their own behavioral biases when it comes to preparing for retirement.

Visit Anne Lester on LinkedIn:
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Episode Transcript


Hanh Brown: Hi, I’m Hanh Brown, the host of the Wuermeling broadcast. On the show, industry leaders share information, inspiration, and advice for those who care for seniors. Our expert panel is discussing your health, healthcare, dementia, caregiving, affordable senior living options, and retirement, all of which address the social determinants of health. Thank you so much for participating in today’s conversation.

Hanh Brown: Check out Care String, our recently launched platform where we match seniors with their caregivers to guide businesses and their employees through the caregiving journey for their loved ones. So please check out Care String.

Hanh Brown: We love to hear from you, those in the audience. We’re all learning together as we prepare for retirement, so please comment or ask questions, and thank you so much for tuning into today’s discussion.

Hanh Brown: The topic is the baby boomer generation, saving smart, and retiring. Retirement planning is intimidating, and it’s hard to know where to start. Do you feel like you’re behind? Are you worried that it’s too late to save for retirement?

Hanh Brown: Well, the fact is, there is no one right answer when it comes to how much you need to save for retirement. Depending on your age, income, health, and other factors, you may need more or less than the average person.

Hanh Brown: If you’re not saving adequately for retirement, then you’re setting yourself up for a difficult future. You may have to work longer than you like or make significant cuts to your lifestyle in retirement.

Hanh Brown: And if you’re a baby boomer, have you saved enough for retirement? The answer is dependent on what you mean by “enough” or “adequate”. Americans have traditionally relied on social security, private pensions, and personal savings to secure their retirement income. This system has served seniors well since World War Two.

Hanh Brown: But the future is uncertain. The baby boomer generation has created a long-term imbalance in social security. Even if privatization is the solution, we must reduce benefits or raise taxes. Since workers can access their pension funds earlier, the future of private pension insurance is uncertain. Personal savings has been stagnant for over a decade. The baby boomers are retiring in large numbers.

Hanh Brown: Many do not have enough saved for their retirement. Beyond the lack of planning, a key reason that baby boomers lack retirement savings is due to the 2008 financial crisis, the global pandemic, as well as chronic low interest rates. With an increasing number of Americans retiring each year, there is a greater emphasis on retirement literacy. The time has come for retirees and pre-retirees to gain the knowledge they need to make sound financial decisions in their retirement.

Hanh Brown: So it’s critical to have a plan in place to ensure that you are on track for a secure retirement.

Hanh Brown: So today, my guest is Anne Lester. He is a former portfolio manager and head of the retirement solutions for JP Morgan Asset Management. Cahana retired in 2020. He is on a mission to help Americans, particularly those in their twenties and thirties, understand that it is possible for them to achieve a happy retirement on time and on target.

Hanh Brown: He continues to be a regular commentator on an array of retirement issues for consumers, industry, and public policy. He’s also working on a book which will help younger savers understand how they can overcome their own behavior biases when it comes to preparing for retirement. So, Anne, welcome to the show.

Anne Lester: Thank you, Hanh. Thank you so much for having me.

Hanh Brown: Thank you, thank you so much for your time and for sharing your wisdom and your aspirations for impacting the younger generation. Can you tell us a little bit about yourself professionally and personally?

Anne Lester: Sure. Well, I worked at JP Morgan for twenty years. I started as a fixed income and foreign exchange trader in Milan, Italy. I moved back to the US in 1997 and in 2000 I joined the group that I eventually retired from, which was the asset allocation group. This group makes portfolio decisions and at that time, the focus was on helping people save for retirement. We designed and managed things like target date funds that help people save and make investment decisions so they don’t have to do them themselves. It was a hugely important job for me to help people, but also to learn a lot more about myself and why I was struggling to save. One of the things I’m really passionate about now is making sure that people know that we’re not born knowing how to save. Some people have a great family situation and their parents teach these things, but many American families, in particular, don’t talk about money. It’s very hard when you enter the workforce to know what to do and how to do it, so that’s what I want to help people figure out.

Anne Lester: Well, thank you. What a great goal. Like I said earlier in our conversation, I plan to share this episode with my kids who are in their mid-twenties because the sooner they get educated and start putting money away wisely, the better off they will be in their retirement. So thank you, thank you for encouraging younger generations to do this. 

Hanh Brown: Let’s talk about building a retirement savings system. What constitutes a well-rounded retirement fund?

Anne Lester: There are a couple of ways to answer that question. On a personal level, I think it’s about making sure you have a combination of guaranteed income that will last as long as you live. For many people, if not most, that’s social security. You just mentioned pensions and it was true, certainly in the fifties and sixties, that many people who retired, maybe over fifty or sixty percent of American workers, had a pension. But today, less than a quarter of those currently retiring have a pension and those are rapidly disappearing. So, having a guaranteed form of income, social security plus a pension, plus perhaps an annuity is a great way to make sure that you’ve got a foundational stream of income coming in that can help meet all of your sorted needs. The second thing you really need is access to additional money that can help supply some of the wants and desires. For example, the needs might be making sure you can stay in your house, making sure that you can feed yourself. The wants might be putting money into your house, making it nicer, going out to dinner, some travel, etc. The desires might be a new car every year or three years, or that fancy cruise that you’ve wanted to take. So, if you think about lining up your portfolio of solutions on a personal level to make sure that you’re making your needs as guaranteed as possible, I think that’s a great strategy. Then you can let your wants and desires correspond to that additional savings that I hope you’ve managed to tuck away in a 401k plan or a 403b plan, or just in your investment savings.

Hanh Brown: So, how would an ideal retirement plan for Americans look like?

Anne Lester: That’s a tricky question. I’ve worked a lot in other countries as well, like the UK, Australia, other European countries, and Asia. One of the things that’s really different about the American system is that social security is relatively speaking more generous than many other national pension plans. We get a lot from social security that’s significantly higher than some other countries. On the other hand, even though senior citizens are eligible for Medicare, there are still some significant out-of-pocket expenses for healthcare, which is typically higher than many other countries. Those two things kind of balance out. What’s different, though, is that many other countries have mandates for people to personally save into something like a 401k plan or they’ve mandated that employers have to provide some kind of pension. Increasingly, I think countries around the world are looking at mandates. There’s currently legislation in front of Congress that I think many of us in this field were hoping would pass last year and it didn’t, but we’re hoping it’ll get in there this year. The legislation would make it mandatory for employers to enroll workers into a 401k type system. It’s not mandatory for people to stay there, so if you decide that’s not how you want to spend your money or you can’t afford it, then you can opt-out. But the notion is if somebody is automatically put into a savings program they’re very likely to stick with it. An optimal solution would involve a little more help for people because it’s hard when you’re confronted with your monthly bills, your student loan payments, trying to save money for a house, maybe you’re paying for childcare. That pension seems like a very far away thing that you don’t really need to worry about yet. But the sad reality is the earlier you start saving, the less you actually need to save. So starting early and making it automatic would be a huge help to people.

Hanh Brown: Amen to that. The sooner you start, you may not have to save as much. I’m going to capture that and tell it to my kids, as it’s huge. It is surprising what a difference it makes if you start in your twenties versus your thirties.

Anne Lester: Absolutely.

Hanh Brown: Great to know. How should the correct savings ratio be calculated to ensure one’s future well-being?

Anne Lester: Well, again, it depends. The standard advice is that if you’re saving between ten and fifteen percent of your total pre-tax income…

Anne Lester: So, you know, if you are lucky enough to work for a company that offers a 401K type program, just set it there to ten or fifteen percent, and that will automatically get deducted from your paycheck before it ever hits your bank account, which is, in my view, the best way to save for retirement. Many employers also match what you’re saving…

Anne Lester: And depending on the company, it’s at their discretion. One of the challenges with American retirement is that everything is at the discretion of the employers. They can choose to offer a plan and they can choose how they structure it, but most companies that offer a plan match fifty percent of what you put in up to a certain limit and that limit is typically six percent. So most employers will kick in another, maybe three or five percent. If you put in ten, they’ll put in three to five, that would get you to fifteen…

Anne Lester: If they only put in three, you might need to put in twelve to save that fifteen percent consistently, and you invest in something like a Target Date fund or a balanced fund where you’ve got a mix. You know, if you’re younger, mostly stocks, and if you’re older, maybe a little less in the stock market and you just leave it alone and let it grow, you will have plenty of money to retire in your mid to late sixties. You really will have a lot of security…

Anne Lester: The “it depends” part starts factoring in when you either want to retire earlier or are very highly compensated because the system caps how much you can put in and because you’re not allowed to contribute more than I think it’s twenty-something thousand dollars this year…

Anne Lester: And if you want to retire early, you might need to save more and so you also need to be saving into an IRA on your own or another investment account so that you can really try to increase your savings. In fact, if you’re over those limits you probably can’t save in an IRA, you might need to save just in a taxable investment account and again the more you earn the less as a fraction of your salary, social security will pay you, and so at some point you can’t save enough inside the 401K system to make it work so you also need to look at supplemental savings outside…

Anne Lester: But generally, ten to fifteen percent is a really good rule of thumb, that’s a really good starting place. Fifteen if you’re a little nervous or if you want to retire a little earlier or you want more flexibility, ten percent is probably going to work out.

Hanh Brown: Great. Do you believe the Social Security account or other federal programs for retirees will continue to exist?

Anne Lester: Yes, absolutely one hundred percent, I believe they will continue to exist. I think honestly, social security is a little easier to answer…

Anne Lester: Even when the surplus runs out, social security will continue paying about seventy-five cents on the dollar to people, so it’s not like your benefits will vanish in a puff of smoke…

Anne Lester: If Congress does nothing, they will be reduced. Now, I personally do not believe that we will actually hit that point. I do believe that Congress, as dysfunctional as some people may call it, will not let that happen…

Anne Lester: It’s not very hard to fix social security and they’ve already done it once back in the eighties when they raised the minimum. They raised the target age to get your full benefit from sixty-five to sixty-seven and that is actually happening right now…

Anne Lester: I suspect what they’ll do is do something like that again. They might, and I think personally they should, raise the minimum claiming age to something like sixty-five…

Anne Lester: Perhaps raise the cap on contributions and twist up that full retirement age in the future for people that are currently in their thirties and forties. I think probably they’ve done lots of studies on this, it will all be fine…

Anne Lester: With a very small tweaks that will impact people in the future, I think social security can really continue to pay benefits that have been promised to Americans who are currently, let’s say, in their sixties and older…

Anne Lester: So, I think social security, even if nothing happens, is not broken. It’s, you know, maybe a little banged up, but it’s again, if it were a car, its bumpers would be messed up but you could still drive it…

Anne Lester: Medicare, on the other hand, is a lot more complicated. That one, the costs are really going to go up a lot and that one is harder to solve. You can’t just do a few little tweaks and make it all magically get solved. I’m pretty confident that the federal government is not going to stop paying for Medicare, but that one is more difficult.

Hanh Brown: I’m a little less confident. There’s a fairly painless way to fix social security, but it’ll be pretty gradual. It’ll happen over a long period of time, and people will be able to adjust their own planning. It won’t be a catastrophic “next year” problem. I think Medicare is tougher, yeah. 

Anne Lester: Sure is. I have siblings who are in that state, so I have a glimpse of what that entails. 

Hanh Brown: Can you talk a little bit more about why it’s so important for Americans to have a decent pension, social security, and other forms of basic income after they work their entire life?

Anne Lester: I think it’s the definition of a just society, one where people have a means and mechanism to live a decent life with dignity and integrity until they die. Without that, we really have to question whether we, as a society, are doing everything we can to help our own members. 

Anne Lester: One of the interesting things when I compare how the U.S. has set this system up versus other countries is that many other countries have a very different definition of a safety net. Many other countries have some universal welfare system that you automatically get if you’re unemployed or an old-age pension that you’re entitled to, regardless of whether or not you worked or what you’ve contributed. In America, it’s a little different. 

Anne Lester: Everyone’s eligible for Medicare, but social security is a benefit that you get based on what you pay in. 

Anne Lester: So, the system in America has always been a little more tied to defining fair as “you get back what you put in”, and that’s true for many of our benefits. So it is an interesting philosophical question. I don’t think there’s a right or wrong answer. 

Anne Lester: The kinds of changes that are now being contemplated, with broad support, are the Secure 2.0 legislation that is looking at making it obligatory for companies over a certain size to enroll their workers in some kind of IRA or 401K type program. To me, that would be a massive, massive improvement because something like fifty percent of employers do not offer a 401K plan and something like thirty percent of workers do not work for a company that offers a 401K plan. Almost every large company does, but many small employers don’t.

Anne Lester: Automatic enrollment became much more normal after a series of pension reforms that happened in 2006, so it’s really only been in the last fifteen years or so that companies have been doing it. 

Anne Lester: So if you’ve been working for a company longer than fifteen years and you haven’t changed jobs, your employer probably didn’t automatically enroll you, that was pretty rare before. 

Anne Lester: So what happens now is, people who switch jobs get automatically enrolled typically with a three percent contribution rate. Some companies will leave you there forever. 

Anne Lester: Automatic enrollment, in my book, is a beautiful thing. But if you assume that the company is taking care of you by automatically putting you in the 401K and you don’t have to do anything else, you might be mistaken because three percent is way below the amount that you really need to be saving.

Anne Lester: So, you really do need to check these things. Again, companies have now started to do something called auto escalate, which means they will automatically increase how much you’re saving, typically by one percent a year, until you get to some number depending on the plan, either six percent or ten percent, or some of them keep going until you hit the ceiling on contributions. So, every company is different.

Hanh Brown: That’s so true. While a company might be instrumental in guiding you towards your retirement, you’ve got to take full ownership, and three percent is not going to cut it. So that’s why conversations like this are important. I hope one of your goals is to educate those who are in their twenties and thirties. That’s great.

Hanh Brown: Looking back to when I was in my twenties and thirties, it didn’t occur to me that I needed to learn about my golden years or even reach out to somebody at JP Morgan. But now, with social media and resources like this, we can inform, educate, and inspire folks in their twenties, thirties, maybe even fifties, and beyond. We encourage them to take this advice.

Anne Lester: Thank you. Here’s a fun fact: Generation Z, those who are twenty-five and younger, are actually the highest percentage of the population contributing into a 401K plan if it’s offered at work. I’m confident that’s because of automatic enrollment. Since they’ve all started their careers in this era of automatic enrollment. Not every company does it, but it’s really rare now to find a company that doesn’t.

Anne Lester: However, the trick is to make sure that you don’t just assume that it’s enough just because your company did it. They must know the right amount, right? There are a whole bunch of reasons why companies may or may not choose to set you at a higher savings rate. Really, it is upon you to make sure that your savings rate is high enough. But at least they’re getting you enrolled, and that’s a good start. 

Hanh Brown: So, when should one start saving for retirement? Would there be a particular event that might seem like the right time?

Anne Lester: In my opinion, you should start saving for retirement with your first paycheck. Let’s say you’re scooping ice cream at sixteen and you’ve got an after-school job. You should try to put some of that into an IRA. Now that may be a little hard. It takes a lot of work and the amount of money may not be very big.

Anne Lester: While I think the best answer is with your first paycheck, it’s probably more realistic in your first full-time job. If you’re working for a company that offers a plan, you should be in there on day one. Absolutely, do not wait. The problem with waiting is you get used to spending that money and it becomes much harder to save later. 

Anne Lester: You don’t have to start at that ten to fifteen percent. You can build up to that over time, and there are some great tricks for helping yourself get there. But start saving and aim to save at least whatever the company is matching, if you can swing it. The match is the easiest free money you will ever make in your life.

Anne Lester: If you’re not saving enough to get the match, you are literally throwing money away. As you mentioned, if you get accustomed to a certain lifestyle at three or four percent, it can be a struggle to increase it to ten or fifteen percent later on in your life. In your later years, you’re likely to have more responsibilities, whether it’s a car, a mortgage, kids, and all those activities can add up. 

Anne Lester: And if you can start saving earlier, that’s better. I look at my son and his friends who are twenty-five and twenty-six and just starting out. It’s tough if you’ve got student loans to take another ten percent out. But I tell them to start at five, try to get as much of the match as you can, and because they’re young, they tend to get fairly frequent raises.

Anne Lester: Sadly, that stops as we get older. But for their first ten or fifteen years, there is a pretty predictable increase in wages for most professions. If you commit to saving half of that increase, you don’t have to save all of it, but if you commit to saving half of it, you’ll find yourself getting to that ten or fifteen percent in maybe three or five years.

Anne Lester: You can get there pretty quickly depending on the industry and where you’re working. But if you commit to that, your lifestyle doesn’t escalate. And you know there’s something called the hedonic treadmill where you always need nicer and nicer things to make yourself feel happy. It wears off. 

Anne Lester: You’d love getting the new car, you’d love getting the brand-new whatever, but after a few days or months, you stop noticing, and it just becomes the new set point that your lifestyle adjusts to. The trick when your income is going up is not to keep resetting your lifestyle higher and higher because it’s really hard to save, and if you haven’t saved enough, it’s super painful to cut back later.

Hanh Brown: That’s true, and I encourage my kids, my oldest is in medical school, the younger one is about to graduate and start working, and I’ve told them to get a roommate and live as if they’re still in college. That’s what I advise them.

Hanh Brown: And you know, getting employment and that first paycheck can be exciting. As parents, we have to guide them after living for thirty-five-plus years. So I appreciate your advice and I’ll make sure I’ll pass it onto them as well.

Hanh Brown: Now, for those in the audience, let us know what you’re thinking, leave a comment, ask questions. We can all help each other get closer to a secure retirement. I want to acknowledge one person here, his name is Pat Clear, and I’m sorry if I pronounced your name wrong, but thanks for tuning in.

I want to talk about burning a hole in your pocket. How do you deal with money burning a hole in your pocket?

Anne Lester: Well, that’s a great question for me because money certainly burns a hole in my pocket and always has.

Anne Lester: Kind of a funny story about that. When I got out of college, I went to work in Washington DC as a staffer for a senator. Salaries were pretty poor, so I had a roommate, was brown bagging it, the whole thing, but really just struggled to make ends meet and my credit card debt started creeping up.

Anne Lester: I got a year-end bonus and it was enough to pay off half of the balance on my credit card. So, I bought a baby grand piano. I’m a musician, I needed a piano, you know, I needed to play. 

Anne Lester: That was a really bad decision financially. It made me very happy, but I didn’t practice much, so it was a colossal waste of money and a really poor financial decision. But I got this bonus check, and I saw an ad in the paper, and it was the same amount as the check, so there I was.

Hanh Brown: That’s a good point. So get it and make sure it lands somewhere else first. With a 401 K plan, make sure you’ve got that automatically set up so you never see it. Then, another really critical thing, especially for people just starting out, is an emergency savings fund. You know, I would almost prioritize emergency savings over retirement. You really need at least three months of living expenses, and those are for real emergencies, not like “my girlfriend asked me to go on vacation with her”, that’s not an emergency. The emergency is: “my car broke down, and if I don’t get it fixed, I can’t get to work”, that’s an emergency. A baby grand piano on sale is not an emergency. 

Hanh Brown: To me, this is critical. Get it out so it never hits your pocket because you don’t want to be trying to fight that fight between your sense of responsibility and defining yourself as “of course I’m an adult because I make responsible decisions” and “yeah, but I kind of want that thing, and it’s right in front of me”. Our brains are not wired to help us make a rational decision in that moment, so you want to make sure those moments don’t occur or if they do, they occur very rarely. 

Hanh Brown: It’s human nature to think that because we were given a bonus or that we’ve earned something more, we should also live more. 

Hanh Brown: I’m not a big spender. My advice to my son is, out of a bonus, just save half of it. Enjoy the other half because you earned it. So, I also think if you tell people not to enjoy any increase in lifestyle or not to splurge every once in a while, they won’t be happy. I mean, for me, personally, if I’m on a diet and I tell myself I’m not going to eat any sugar, or I’m not going to have any wine, or I’m not going to eat any carbs, you know, I can do that for maybe three days. Then, let me tell you, nothing good happens. 

Hanh Brown: I totally break down and indulge in all of them. That’s how some people might work, but if you can make it work for you, good luck. To me, it’s about not bringing temptations into my house in the first place. If it’s not in the house, I don’t eat it. It’s a similar idea with money. If it’s not in your bank account, you’re not going to spend it. 

Hanh Brown: It’s like having a special savings account. It’s not in your main account, and you can’t easily transfer it back and forth, so it’s a lot harder to spend. Make it a little hard for yourself to get to, so you have to stop and think: “Do I really want to do that?” Because often, that one moment of pause is enough to let your rational brain catch up with your emotions. 

Hanh Brown: Discipline is an interesting word. I find I don’t have much discipline personally, so I try to set up systems where I don’t have to exercise any discipline. I don’t have to make the choice, it just disappears. 

Hanh Brown: Because the second I have a temptation, it’s a constant battle with my other family members who really like cookies and I’m like ” I don’t want them in the house”. If they’re not in the house, I never think of them. 

Hanh Brown: That’s a great way to think about it. You don’t want to force yourself to have to exercise discipline, you just want to remove the temptation. It’s about setting up rules, frameworks, or models that don’t require you to spend energy resisting something that you, for whatever reason, really want. 

Hanh Brown: But in the heat of the moment, your rational person is not in control of your decision making. So, in my opinion, the best strategy is not to engage in the fight in the first place. So, let’s talk about the steps to save smartly and retire in time. I know that you’ve shared pieces of this earlier. 

Hanh Brown: Well, we’ve been talking about it. It’s really about automation and not telling yourself “I have time later” because the longer you wait, the more you will have to save. I think it’s so easy to underestimate the power of compound returns. If your portfolio, what you’re invested in, earns seven percent a year, which I don’t think is a crazy aggressive return target – six, seven percent – at seven percent, your money will double every ten years. 

Hanh Brown: So, the difference between starting to save in your twenties and in your thirties is enormous. If you hypothetically start saving, you know, a hundred dollars a month and you start at the age of twenty-one versus thirty-one, you’ll have almost twice as much money if you started at twenty-one. 

Hanh Brown: That’s a huge difference. So even if it’s not a lot, start. To me, that’s the number one thing. The first trick is to automate it and make sure you don’t have to wrestle with temptation because, generally not always, but generally you’ll lose. The more you automate, the less you have to wrestle with your own thought pattern. 

Hanh Brown: The second thing to do, and we touched on this earlier as well, is to start preventing lifestyle creep. Lifestyle creep, or the hedonic treadmill, is terrible for two reasons. 

Hanh Brown: The first reason is pretty obvious. If you’re spending all of your increase in money, you’re not increasing your savings rate. So that’s bad. An easy trick to prevent this is to commit to saving at least half of any increase. That way, you get to enjoy a slightly increased lifestyle, which I think is not unreasonable. 

Hanh Brown: The second reason lifestyle creep is so terrible is that you will need to have saved more to maintain that higher standard of living. So it’s a moving target. The amount of savings you need is going to be higher, but you’re actually creating a situation where you’re saving less.

Hanh Brown: Right, that’s a terrible dynamic and then, when you get to the point of retirement, you either have to keep working because you can’t afford to retire, or you will maybe be forced to retire by circumstances. 

Hanh Brown: And you will have to take a drastic cut in lifestyle and that’s going to be really painful. That cut in lifestyle is going to hurt you a lot more psychologically and emotionally, then not taking a 100% of those raises and lifestyle increases when you were younger. 

Hanh Brown: And you know, many people are on a fixed income in their later years, like baby boomers. We talk about increasing bonuses and raises, and then having the temptation or not having the temptation to keep up. But here’s the thing though: you gotta keep in mind that it’s not going to keep going up, it’s going to be fixed.

Anne Lester: It’s social security in particular or that pension will be fixed. What’s wonderful now about being able to think about using your own savings is that that pool of assets can continue to grow with the markets. 

Anne Lester: So when you’re saving and you leave your money invested, it can continue to increase and continue to provide that cushion. The third thing, and again speaking of investments, that I think is really important for people to do when they’re saving for retirement is make sure that that money is invested.

Anne Lester: And invested in such a way that doesn’t make you either freeze with information overload or freeze because you are scared, you’ll do the wrong thing.

Anne Lester: Or turn into a day trader and start buying and selling because generally people don’t do that very well. They sell and buy at the wrong times and erode their wealth. 

Anne Lester: So for me, the third key to successful retirement is actually taking a page out of the first step. Automate your savings, automate your investing, at least in your retirement account so you’re not messing with it consistently. 

Anne Lester: You will do better, you will have better returns than if you are in there fooling around or if you are frozen in fear and left all your money in cash. That’s a terrible thing to do. 

Hanh Brown: Can you talk about the importance of the 401k when it comes to saving for retirement, and what are some ways that people can save money in retirement outside of the 401k?

Anne Lester: The 401k system has turned into the primary vehicle for providing retirement security after social security. 

Anne Lester: It was set up in the seventies as a way to allow supplemental savings. So, over the last fifty years, it has evolved from a way to save a little extra on top of your pension to actually being the primary way to save money. 

Anne Lester: This was never designed to be a pension. All the changes that we’re talking about that have been made in the last fifteen to twenty years and that we’re hoping to see happen in the future with automation are attempts to make this a primary way to finance a significant portion of your retirement. 

Anne Lester: So, the number one thing you need to do is get in and max it out. By max it out, I mean, get up to that fifteen percent if you can. 

Anne Lester: If you’re highly compensated, the maximum contribution that you can make into your 401k isn’t enough. So you have to save outside your 401k plan into a brokerage account or a wealth management account. You’ve got to get that money saved and invested for the long term.

Hanh Brown: How much does the average baby boomer have for retirement right now? And what kind of advice would you give to baby boomers about retirement?

Anne Lester: It’s tricky because I’m really not very fond of those average statistics because they tend to muddle up a lot of different things. 

Anne Lester: On average, balances are actually quite low for people, probably not more than one hundred thousand dollars. But that’s blending a whole bunch of people with zero and a whole bunch of people with, you know, between two hundred fifty to five hundred thousand, and then some people with a lot of money. 

Anne Lester: It’s really hard to do this by yourself. So, I think that average number is not very helpful. However, some statistics that I’ve seen would say that for people who had access to a 401k plan and have used that plan consistently typically have…

Anne Lester: Those sort of in the three hundred to five hundred thousand dollar range when they approach retirement. And that is, again, depending on how much you earned, probably going to be enough to replace about seventy five to eighty percent of your income before you retired, which is generally.

Anne Lester: What most financial planners use as a rule of thumb about how much income you should try to replace. So if you can’t access, and if you’ve used it, you probably are doing okay. And again, the markets have done tremendously well, even with the pullback in 2008. When you look back over the last thirty years, the markets have done extraordinarily well so.

Anne Lester: If you’ve had the money invested, it’s grown significantly.

Hanh Brown: So what is the implication of retirement of the baby boomers on the rise significantly now, 2030 and beyond? What’s your take?

Anne Lester: I think there are a bunch of different things at play. One is what kind of job you’re in and are you able to continue to stay engaged in the workforce in some way. For example, I retired, and I’m technically a baby boomer, barely.

Anne Lester: And I’m busier than I ever was. My income is lower, but that’s okay. I’m still earning some income and I’m really enjoying what I’m spending my time on. I do think as people live longer lives and again, you know, people today in their fifties and sixties need to assume that they will live to be in their nineties, you have to think ninety-five if you’re planning unless you’ve got a really good reason to think that due to your own family history, that’s very unlikely.

Anne Lester: Because of that longer lifespan, I do worry that people who are really focused on retiring in their fifties without some plan to earn additional income are really gonna be straining at some point.

Anne Lester: It’s not just because of the income, but also, what are you gonna do all day? I think especially if you’ve been working, been engaged, been in a social community, and felt, I hope, some meaning or purpose in what you’re doing, it’s very hard to cut both of those off, both the social engagement and the purpose that you’re feeling from the work you do. Not everyone is lucky enough to have a job like that, but hopefully, you can find that, and then secondly, the money, which is a big deal.

Anne Lester: So, the question for the individual is, how are you gonna manage that tension? The second thing I think is a really interesting question, and I don’t think there’s any good evidence yet on which way this will go, but it’s a question I used to hear a lot when I was working at JP Morgan Asset Management. What is going to happen to the stock market when all these baby boomers start retiring and selling their stocks?

Anne Lester: I’m not sure that that’s something I would worry about much because I do think that the younger generation of savers coming up behind them, with these automatic enrollments like if this legislation passes, that says employers have to automatically enroll their employees, thirty percent of Americans are going to start saving and investing who haven’t before. 

Anne Lester: That’s gonna actually put more money into the stock market, not take it out, so I do think that worry is a bit unwarranted. It’s too uncertain for me to want to do something in response to that as a concern.

Anne Lester: From the lower your income before you retire, the more social security replaces, relatively speaking. So I think that’s another consideration. The higher your income, the more you need to have saved because you’re uncertain about how your portfolio will do and how you will draw it out of your 401K plan. I do think that you need to maybe have a little more money saved up then if you are earning a lot less and social security may replace sixty percent or seventy percent of what you are earning.

Anne Lester: Very true. Do you think that we might see a change in the definition of retirement as we ponder the next act after leaving employment?

Anne Lester: I really hope so. I mean, again, I don’t even like the word ‘retire.’ Nobody likes the word retirement, it means to withdraw. I’m out there more than I used to be, so I don’t like the word much. Some people talk about choice.

Anne Lester: To me, it’s the ability to make bigger choices about how you spend your time and maybe with whom you spend your time. That’s how I would define retirement, it’s having a lot more control over what I do with my time. I’m certainly still working, I’m certainly still engaged in my former professional field.

Anne Lester: I’ve read a lot of research from futurists who look at people who are today in their twenties, who probably should live to be a hundred, and for them, it may be perfectly sensible to think about taking a sabbatical for a year. Why do we want to backload all of our leisure time or our choice time into our seventies and eighties when we arguably are not going to enjoy it as much?

Anne Lester: So to me, another reason to be focused on really getting into the habit of saving, and if you want to take sabbaticals, saving a lot, is to allow yourself to smooth out your income over your lifetime, and smooth out your choice time as well because I do think those two things go together.

Hanh Brown: Absolutely. I also believe, just like what you’re saying, baby boomer entrepreneurship is on the rise and it will continue to be so. As far as we were retirement, I guess I have a personal take on that. I feel like as long as you’re healthy, your cognition is intact, and you still have a drive for purpose, and that purpose could be evolving, it’s not something that’s found, and you stick with it, perhaps it could be evolving for people as long as you have that drive.

Hanh Brown: As long as you’re in good health, you should keep pressing on, living, learning, contributing, and having fun with life. I agree with you that the word ‘retire’ has a negative connotation. It suggests withdrawal and giving up, which shouldn’t be the case. We should continue to live, learn, contribute, and enjoy life.

Hanh Brown: One of my former colleagues says that she’ll retire when she dies and maybe not from the full-time job she’s got now, but she’s not going to stop. And I think I’m with you. As long as I’m physically and intellectually able to do it, I want to stay engaged. Don’t get me wrong, I like leisure activities, but I don’t want to do that all the time because then it would stop being special. And I think the word ‘choices’ or ‘options’ to me, that’s what retirement is. It’s because you have the option to choose what you want to do, who you want to spend time with, and so forth.

Anne Lester: A few folks here have a question. Is there any suggested age for retirement? Would seventy be good if your life expectancy is ninety-five? This question touches a lot on what we were just talking about. To me, it’s really more about what your savings allow you to do. What choices does the amount you have saved up when you hit sixty, sixty-five, seventy allow you to do?

Anne Lester: And very importantly, there’s a very specific question I’m going to assume was in the background here, which is, when should you start claiming social security? I don’t think that the day you leave your formal employment has to line up with the day you start taking social security. I would strongly urge people to think hard about that.

Anne Lester: Your full social security benefits age is going to be sixty-seven for most people who are listening to this call, unless you’re already retired or in your sixties. You can claim social security at sixty-two, but you only get seventy-five percent of your benefits. You’re going to get a pay cut for life on perhaps the only guaranteed inflation-protected income source you’ll have and that, to me, is not a wise decision.

Anne Lester: If you wait till seventy, you will get one hundred and twenty-five percent of what your full benefit is. For those people who can either stay in the workforce or use some of their savings to bridge that gap, claiming it at seventy is by far the best strategy because that is a guarantee.

Anne Lester: I was fortunate enough in my financial planning to save into a deferred compensation program that will pay out over fifteen years, so basically, I’m going to get that fifteen years of deferred compensation and then I’ll claim social security at seventy, and those two things are going to be kind of lined up with one another. That’s my personal strategy for that.

Hanh Brown: Great, well, thank you. We’re at the tail end of the conversation, but there are still a few important questions I want to raise. I’m not sure if the live event will cut us off or end the event before we’re ready, but I want to make sure we cover these last few important questions.

Hanh Brown: What is the truth behind why women are so behind in saving money? Why do you think it is more difficult for women to save money than men?

Anne Lester: I think there are three big reasons. The first is women are in lower-paid jobs. I mean eighty cents on the dollar, I think, was the last maybe eighty-three that I saw for the equivalent job, so women are getting paid less. So, if you don’t make it, you can’t save it. The second is women skew towards industries that don’t have 401k plans. They don’t have that easy button to hit for workplace savings. I’m thinking about hospitality, retail, a lot of these companies either don’t offer 401k plans, or they don’t offer them to part-time or hourly workers.

Anne Lester: The third reason is that women step out of the workforce to take care of their families and have children much more than men do. And if you’re out of the workforce, you’re not saving. The fourth reason is that women tend to take care of other people before they take care of themselves. If a woman is in charge of her own savings and in charge of her family, it feels very selfish to prioritize her retirement over other things.

Hanh Brown: Right, yeah, I don’t know if it’s an instinct, but I’m with you two hundred percent. We tend to look after others before ourselves and everything you described, those four components, I’m right there with you. So it’s something that we have to overcome, and I’m trying to change that paradigm for my daughter.

Hanh Brown: How can people reach out to you?

Anne Lester: Absolutely, please follow me on my social media platforms: LinkedIn, Instagram, and Twitter. My handle is Stay Smart with Anne on Instagram and Twitter. You can also sign up on my website www. and I’m starting to send out a monthly newsletter. It’d be great to hear from people.

Hanh Brown: Whether you are in your twenties or thirties or a baby boomer, it’s important to prepare for the future. The time has come for all generations, retirees, and pre-retirees to gain the knowledge they need to make sound financial decisions when planning their retirement years. Please follow Anne and subscribe to our YouTube channel, Aging Media Show, and leave a review on iTunes Podcast, Boomer Living. Thank you for tuning in, I appreciate your time and interest. Thank you again.

Anne Lester: Thank you.

Hanh Brown: Thank you for listening to another episode of “The Boomer Living” broadcast. I know you have a lot of options when it comes to podcasts, and I’m grateful that you’ve chosen this one. Please share this podcast with your friends and family, write a review on iTunes, Spotify, and Google Play. It helps others discover the show. You can also contact us at (736) 350-6242, leave a review, and request content for the show. We love hearing from our listeners. Check out our TikTok, Instagram, and YouTube Channel, Aging Media Show, and subscribe to get weekly tips on how to best serve the senior population. We want to help them have a great experience as they age. Thanks for tuning in until next time.

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