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What do baby boomers want? You’d be surprised

Financial editor Jean Chatzky shares advice on how to achieve the American dream.
/ Source: TODAY

What do baby boomers really want? And how do they handle their finances? A new survey from “Money” magazine shows it may not be what you think. Boomers — those people everyone thinks of as free-spending hard-workers — seem to have undergone a shift. According to “Money” magazine, they're starting to reinvent an American dream that “emphasizes friends and family over making money, having fun over working hard, and making a difference in the community and the world.” In fact, 63% of participants said their definition of success has changed since their late teens and early twenties. A full 85% of boomers claimed their top goals included maintaining health and 59% of boomers said enjoying life is their biggest dream if money were no object.Unfortunately, money is a big stumbling block — even for boomers at the height of their careers. Some 65% say they want to save enough for retirement and 59% say they think they'll be able to maintain their standard of living in retirement. But 90% have not done a great deal of retirement planning, while 78% think Social Security benefits will be lower when they retire. And less than 20% consider themselves to be knowledgeable when it comes to investing for retirement.So what can baby boomers do to protect themselves and improve their finances? TODAY Financial editor Jean Chatzky shares some helpful tips:

Run the retirement numbersMost Americans don't know how much money they'll need to retire. If you haven't run a calculation of how much you should have in your nest egg, it's time. Go to the Web sites of three different financial institutions and use their calculators to estimate your retirement needs. (“Money” magazine has good retirement calculators as well). I like looking at several different calculators and then taking an average because you're never quite sure what calculations lie behind the screens, but running several will give you a ballpark. Then you can play around with the parameters. What happens if you work a little longer? What happens if you invest a little more aggressively? What happens if you save a little more? If you can't reach the answers yourself, it's time to consult a financial adviser — even if you only do it for a couple of hours.

Up provisions to boost savings
You probably already know that you can pump money each year into retirement accounts like 401(k)s or IRAs and that money will grow tax-free until retirement. If you're over 50, the tax-code now contains “catch-up” provisions that allow you to put more money into those accounts each year than someone younger than you. People over 50 can put an extra $5,000 into their 401(k)s, and an additional $500 into IRAs. If you make the additional 401(k) contribution from the year you turn 50 until the year you retire at age 65, that money will be worth an extra $155,507.

Remember, retirement first, college second
I know, that doesn't sound especially palatable if you're a parent. But particularly for those parents who had their children later — you have to realize you may be facing college for your kids, retirement for yourself, and nursing or at-home care for your older parents all at the same time. This is one of those times you have to get selfish and, remembering that there is financial aid for college, and Medicare and Medicaid for seniors, fund your own retirement. If you're looking for a compromise, put money into a Roth IRA where you can withdraw it to pay for college without penalty and withdraw the contributions at any time.

Trade-down early, if necessaryOne way to improve your financial scenario for retirement is to dramatically cut your cost of living. That can mean selling a big family house, banking the gains (investing them for retirement) and starting to live a little more cheaply — before you have to. This will allow you to spend less of your current income as well.

Consider long-term-care insuranceFinally, as you reach age 55 or 60, you need to think beyond retirement and toward long-term care. Long-term-care insurance is not cheap — and it's not worth getting into if you won't be able to sustain paying the premiums over decades. But it is something that makes sense for a certain group of people — particularly those with investable assets of between about $300,000 and $1,500,000. People who have fewer assets will quickly exhaust them if they need long-term care and qualify for Medicaid. Those with more assets should be able to invest them and pay for their own care.

With reporting by Arielle McGowen.

Jean Chatzky is an editor-at-large at “Money” magazine and serves as AOL’s official Money Coach. She is the personal finance editor for NBC’s “Today” show and is also a columnist for “Life” magazine. She is the author of four books, including “Pay It Down! From Debt to Wealth on $10 a Day” (Portfolio, 2004). To find out more, visit her Web site, .