Pressure packed

Advisor challenges
Van Slyke and Elder agree that one challenge for advisors is to get boomers to recognize too much of their net worth is tied up in a house they don't need. It's either the house they raised their children in and therefore don't need the room anymore, or it's the house they bought after the kids were gone as their reward for a job well done and they therefore don't need the room anymore.

"It's smart to get more of their net worth out of their house and into assets that are more liquid," Van Slyke says.

Elder suggests downsizing and becoming a landlord. "[I tell clients] to sell the house they're in, buy a duplex, live in one half and rent the other half," thereby decreasing their mortgage and gaining some rental income to boot.

Boomers are going to have to make their money work harder for them than ever before if they want a comfortable retirement. Defined-contribution plans outnumber defined-benefit plans by a 14-to-1 margin, according to the U.S. Department of Labor, Employee Benefit Security Administration. Traditional pensions are foreign to most boomers, so they need to make those 401(k)s, IRAs and mutual funds stretch. That probably can't be accomplished by playing it safe with all of one's money. But memories linger.

"Many boomers made horrible choices in the 2000-to-2003 time frame," Van Slyke says. "Some are still lost or they are scared."

Risk averse. Gun shy. Conservative. Once bitten twice shy. Whichever phrase applies to your clients, they must be convinced that some of their money has to be out there earning more, even if it is riskier. Inflation alone dictates that.

"They must realize we're looking at a longer time frame," Elder says. "You can't put all your money in a bond fund anymore and outpace inflation. There are only two places to put your money to outpace inflation: stocks and real estate."

Elder acknowledges there is more risk in that strategy than in leaving one's money in a bank, but he insists that over the course of 20 or 30 years – the length of retirement for boomers – the stock market is the best way to ensure a client's money makes money, which is the ultimate goal.

Van Slyke knows many boomers will remain risk averse after taking their beating with their tech-heavy portfolios, and he says that's fine – to a degree. It's OK, he insists, to put a portion in annuities, where the income is guaranteed down the road (even if it can't outpace inflation). But clients will need to be more aggressive with the rest, especially those without a sufficient amount accumulated to be comfortable for the lengthy post-career period. What that amount is depends on where people live, but he says in the La Jolla area where he practices, it takes $5 million to $6 million for a retiree to have enough. Those without the funds need to expose themselves to a little risk for the potentially large gain.

Results
Work longer. Save more. Take a few (relatively small) risks. Trade down. Valid pieces of advice all. The boomer generation has been defining and re-defining itself for decades, and defying expectations for much of that time. Boomers have raised children, founded multi-billion-dollar corporations and a couple have even been president, each a terrifying thought considering many of them had the opportunity to agitate for or against the Vietnam War and disco.

Under the tutelage of knowledgeable, expert advisors, boomers may again defy expectations by securing prosperous and long retirements. One never knows. What is certain is that many bad habits must change, to be replaced by those of saving, planning and being smart about all things retirement. Good luck.