Humberto Cruz

What do an Internet connection, weekend gateways, professional haircuts and hair coloring, and shopping for birthdays and special occasions have in common?

They're all considered basic needs rather than luxuries by many Baby Boomers, in some cases the majority among a group of 1,049 working Americans ages 45 to 65 who participated in a recent survey by Harris Interactive.

"We have clearly expanded beyond the three traditionally thought-of necessities" of food, clothing and shelter, said Matthew Leung, a director of MainStay Investments, which commissioned this "Retirement Lifestyle" study of Baby Boomers with $100,000 or more in investments.

The item chosen as the top need among a list of choices offered in the survey was health care coverage (I agree that's a need). The No. 2 need was having an Internet connection (working from home, I agree also), followed by shopping for birthdays and special occasions, and pet care (if I had a pet I might agree).

Other top needs as defined by about half the Boomers surveyed included family vacations and getaways, professional elder care or home aid, professional haircuts and coloring, and funding children's and grandchildren's education. (I would prefer to call these "nice things to have or do" rather than needs.)

"Things that were once considered luxuries are more likely to be considered basic needs" by many, Leung said, including housekeepers, lawn service and club memberships.

That's well and good, but I wonder whether Boomers' wishes are grounded in reality. For example, although 74 percent of Boomers picked health care costs as their first or second greatest anticipated cost in retirement, 41 percent acknowledge they're doing nothing specific to save for health care. Most Boomers say they are willing to cut back now to enjoy a better retirement but many find it difficult to give up things most of them do consider luxuries, such as traveling, dining out and keeping up with technology.

But something must go when the things you say you need cost more than what you have. I have only anecdotal evidence, but, in the midst of an uncertain economy, my reader mail suggests a growing sense of apprehension among Boomers who realize they won't have nearly enough savings to retire.

To them -- and to all -- I offer these excellent suggestions from Richard Hitzemann, a reader from Oro Valley, Ariz., who was able to retire at 54 by following the same advice he and his wife taught at a home budgeting class at their church:

For starters, every dollar of spending had to be accounted for, just like a business keeps receipts.

Any major purchase had to go on a "wish list" first. You could have only one item on the wish list at a time and you had to wait at least 30 days to buy it. In other words, you could not buy a new television set just because there was a special sale (My comment: I am sure there will be other special sales.)

Also, any major purchase had to be thought of in terms of how many hours of net take-home pay it would take to pay for it. For example, if a new large-screen television set sells for $2,000 and you make $20 an hour, and your net take-home pay after taxes and other deductions is $15, it would take 133-plus hours, or more than three weeks of work, to pay for it.

My comment: Follow these habits faithfully, and you will meet (and perhaps redefine) your needs.

Available at Amazon.com:

Lifecycle Investing: A New, Safe, and Audacious Way to Improve the Performance of Your Retirement Portfolio

Worry-Free Investing: A Safe Approach to Achieving Your Lifetime Financial Goals

Spend 'Til the End: The Revolutionary Guide to Raising Your Living Standard--Today and When You Retire

The Hard Times Guide to Retirement Security: Practical Strategies for Money, Work, and Living

 

Personal Finance - Boomers Take On 'Necessities' May Not Be Grounded in Reality

© Humberto Cruz