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Baby Boomers' Game Plan for Retirement

Baby Boomers are “exhausted and emotionally frustrated with Wall Street.” As a result, "they are doing nothing and will not be able to retire,” Frank Troise from the company SoHo Asset Management told CNBC today.

Boomers were initially advised that they would see an 8 percent return in the market over 20 years. So, they built in this expectation for the long term.

When the financial crisis hit they were devastated by the crushing blows to their 401ks—the average loss to 401ks, 24.3 percent.

In order for Boomers to get back to their target goal of 8 percent and still be able to retire by age 65, the investor needs to recover the money that was lost. For example: An investor who is 40 years old and lost 30 percent of their 401k will now need an annual rate of return of 9.55 percent (per year) until they reach 65 years old. (See the graph for full breakdown.)

Going forward, how much money do Baby Boomersneed to recover and will they be able to retire as planned?

Troise believes, "Baby Boomers have an unrealistic return set" and with no trust left in the market—after believing in stocks for the long run—"they are not doing anything, which is wrong."

So, with over 70 million people making up the Baby Boomer generation—those born between 1946 and 1964—Troise suggests the following game plan:

  • 1) Right now, reassess your cost-of-living and expenses.
  • 2) Change the relationship you have with your financial advisor.
  • 3) Reconsider investing in the market, under the guidelines of a fixed-income portfolio with very short maturity, and go long in equities.

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