Baby boomers

Let Go of Frugality: How Baby Boomers Can Responsibly Invest in Enjoyment


Guest Article by Jim McKinley of

Baby Boomers were raised by parents of the Great Depression, so frugality is in our nature. It’s one thing to be responsible, and it’s another entirely to live as if we are fighting poverty daily. For many of us, we can afford to indulge ourselves and truly make our lives enjoyable.

Help for Fixed Budgets

When we live on fixed budgets, following our dreams can be difficult. To free up cash, consider switching from traditional life insurance to a final expense life insurance policy. This is a more affordable option that will still protect your family in the future. These policies are easier to qualify for, yet give us the comfort of knowing our families will not go into debt over a funeral. Although this isn’t always the easiest step to take, knowing that everything is taken care of will take that weight off your shoulders and allow you to have a little fun.

Make a Plan for Your Health

Perhaps one of your most pressing concerns in your golden years will be staying on top of your health, so in order to grab life by the horns and enjoy this era of your life, take care early on to make sure your health needs will be covered now and in the future. Medicare is a boon for most seniors, so find a plan that meets your needs and budget if you haven’t already. Using a step-by-step online guide will help you make sense of the many different Medicare plans available to you, and show you exactly how to sign up for your perfect plan on

Travel Smart

One thing many of us aspire to do is travel. Unfortunately, costs can skyrocket, especially if we don’t take time to plan. Hotels are often unaffordable, but their rates drop when you visit during theoff-season. In fact, you don’t have to stay at a hotel; instead, why not immerse yourself in local culture by using non-traditional accommodation? This could mean using camper vans, Airbnb apartments, or even house sitting. Should you go abroad, book plane tickets in advance, and aim for a Tuesday travel date. Wherever you go, plan out what you want to do before you arrive. That way, you can find free or inexpensive attractions while exploring something new and exciting.

Go Secondhand

Have you always wanted to ski, but balk at the cost of all the equipment? Stop by your local thrift store and see what sporting goods they have. You may have longed for nice jewelry or a designer coat, but you don’t have to spend big on these pricey items. Instead, buy them secondhand. They’re often in pristine condition or need just a bit of cleaning. The best part is that no one will know you didn’t pay top dollar for them. Buying secondhand allows you to experience new things and remain fiscally responsible.

Adopt, Don’t Shop

Now that we’re of the age to retire, many of us have more free time than we’re used to. One excellent way to use that time is to adopt a pet. Pets of all varieties are beneficial to us. They keep us happy, energized, and active. In fact, being around pets relieves stress and can even decrease our risk of heart disease. However, don’t go out and buy an expensive puppy. Even if you want a particular breed, you can adopt a rescue for a fraction of the price. What’s more, rescue pets are often already housebroken, which saves you the effort of potty training. Best of all, you’re saving an animal from being put down, because shelters are perpetually overcrowded.

Transform Your Home

Are there projects you have always wanted to do, but could never justify? Now is the time. It doesn’t take a lot of money, and many jobs can be doneyourself. For example, you can transform the feel of each room by adding crown molding, or put in plantation shutters for a touch of class and to make cleaning easier. Look outside the home, too. You may want to transform a grass lawn into a lushgarden. This has added benefits, as gardening is a fun and healthy way to stay active.

While it’s smart to be sensible, we don’t need to deny ourselves fun. There are clever ways we can save money and have a great time, too. Plan accordingly, and soon, you’ll be living the life you have always dreamed of.

Image courtesy of Pixabay

Baby boomers’ 2016 birthday gift to IRS

By Bankrate

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

Baby boomers reach a momentous tax birthday this year, but it’s the Internal Revenue Service that will be getting presents.

The first baby boomer was born on Jan. 1, 1946. Yes, that’s been documented. Kathleen Casey-Kirschling has this distinction.

Important RMD birthday

As Casey-Kirschling and her peers reach age 70 1/2, if they have money in traditional IRAs or other tax-deferred retirement accounts, such as workplace 401(k)s, they must start taking out some of those funds.

This process is known as required minimum distributions, or RMDs. They are based on actuarial data and require affected account holders to calculate how much to take out of these accounts based on their ages.

Exactly how much to withdraw is spelled out in one of several IRS tables, the most commonly used being the Uniform Lifetime Table.

The reason for the RMD rule is simple. Uncle Sam is tired of waiting for folks to withdraw their retirement funds that are growing without being taxed. By making account holders take out at least some of the money when they hit 70 1/2, the U.S. Treasury starts getting taxes, at ordinary tax rates, on at least some of the holdings.

Age-based withdrawal amounts, deadlines

Basically, you take the total value of all your deferred retirement accounts at the end of the year just before the one in which you hit 70 1/2 and divide it by the amount shown in the IRS table for your age.

That’s the amount you must withdraw and pay taxes on when you file your next tax return.

You get a brief reprieve in the year in which you turn 70 1/2. You can postpone that first RMD until the following April 1st. For the new RMD baby boomers this year, that means taking their first RMD by April 1, 2017.

But that also means in 2017, they’ll have to take 2 RMDs: the deferred 2016 tax year withdrawal and the one for 2017, which must be made by Dec. 31.

Birthday tax math time

Happy birthday, boomers! Now do the math. Bankrate’s RMD calculator can help.

If it’s better for you to make your first RMD this year, do so by the end of the year.

If, however, for your financial and tax purposes, it’s better to wait until next April for your initial RMD, then wait. As long as you meet that deadline, the IRS is willing to wait for its present from you for hitting this tax-important half birthday.

RMD alternatives

Just because you must take out the money doesn’t mean you have to spend it. You can put it back into some other, taxable account where it can keep growing.

Or if you’re feeling philanthropic, you can have your RMD amount directly transferred to your favorite nonprofit. You won’t get a tax deduction for the RMD-based charitable gift, but you won’t have to pay income tax on the donated amount.

High cost of missing RMD deadline

But don’t miss the required retirement account withdrawal. The penalty is stiff.

Not making your prescribed RMD on time means that in addition to the required withdrawal amount, you’ll owe Uncle Sam an additional 50% of the amount that you should have taken from your accounts.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.


Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.