No matter how much times people dream about their retirement, few are actually prepared emotionally and financially. We will leave the emotional aspects for another time and focus on the financial aspects of retirement. The general consensus when I was growing up was that you needed to have 70% of your income at retirement because your expenses would be much less. I guess that is true if you don't expect to do very much but most retirees want to live better in retirement than they did previously. They want to travel and do things during their new found freedom. Living on 70% of one's previous income might not cut it.
A couple of things have happened over the past couple of years that have made even 70% almost unobtainable for many. People have seen the equity in their homes plummet as well as the value of their 401K plans. Many baby boomers are either going to have to work longer or find something that will allow them to supplement retirement income before or after retirement. Some are continuing to work while they collect early Social Security benefits.
Opting for early Social Security is somewhat problematic however. You can begin to collect Social Security at 62 but there are limitations on how much you can earn without being penalized with a smaller Social Security payment. Also, Social Security pays out about 24% at age 62 and 32% at 66. If you take early benefits at 62 and continue to work, you will also have to have Social security withheld. Once you stop working and reach age 66, your Social security benefits will be recalculated.
Medical costs need to enter into consideration as well. With the new health care law, nobody really knows what to expect. The first effect is that insurance rates will go up and taxes will also increase. This makes it even more difficult to save for retirement. Medicare will also be changed so this is just another impediment to baby boomers who want to have a financially secure retirement.