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Introduction to Financial Planning
Nowadays, we hear about the baby boomers everyday. The baby
boomers are the generation born between World War II and the
early 60's. They form the largest American generation, 78 million
people or 30.8% of the U.S. population. It is estimated a baby-
boomer will turn 50 every 7.5 seconds for the next decade. You
might say, what does that have to do with me?
The baby boomer generation includes the parents of most of us. As
they begin to retire in the early part of the next century, when
we are in our 20s or 30s, they will start collecting Social
Security. Such a large number of people would put a tremendous
strain on the Social Security system.
Many experts have predicted that this will lead to the bankruptcy of the
Social Security system around the year 2010. That's a lesson for
all of us--we can't rely on the government to provide a
financially secure retirement, we have to rely on ourselves.
But retirement is still four, five decades away, we don't need to
worry about it yet! Wrong. The fact is, the later you start
planning and saving, the more money you will have to save and you
will need a higher return on your investments. Starting early
requires you to put away small amounts of money consistently,
would not affect your lifestyle and leads to more money for
retirement than starting late. For example, if you start saving
$50 a month at age 25, you can expect to withdraw about $57,000 a
year at age 65. But if you start saving at age 35, you would need
to save $200 a month for the same result! Check out this chart
comparing start savings at various ages and various
The typical baby boomer is saving only a third of the
amount needed to retire in comfort and he or she says they can't
save any more. Do you want to be in their shoes? Slow and steady
will win the race!