“I’m fortunate my occupation offers good retirement benefits. Otherwise, I doubt I’d have much saved. I’ve put one kid through college, have another in college now and a daughter just entering high school. Our priorities have been financing their educations and building our dream home. I haven’t stopped to think about, "Will I have enough saved to retire?" and there certainly has not been any money to pursue outside investments. Social Security will have to help. And I doubt we’ll be able to live in our current residence once I retire. I’d love to retire in nine or ten years but I think I’m dreaming.”

Characteristics of Baby Boomers
Baby boomers have been called a lot of things: hippies, yuppies, Mom and Dad. They’ve also been called shortsighted and spend-thrift, accused of living for today instead of tomorrow. Almost 80 million people, between the ages of 36 and 54, fall in the boomer category. Here’s how a significant number of boomers generally approach retirement planning:

• Born to parents who lived frugally, baby boomers have been slow to emulate this example.
• Many have postponed retirement saving well into their 40s and 50s.
• Some Boomers are counting on the sale of their homes or inheritance dollars from their parents to finance retirement.
• Many Boomers say that saving for kids’ college tuition has taken precedence over saving for retirement.
• There’s also a trend among boomers towards "hybrid" retirement. Boomers who started saving too late, or can’t sock away enough, will have to retire into new jobs, so they’re shifting from full-time to part-time or consulting work.

Boomers will need a lot of cash to maintain their lifestyle. If a person earns $45,000 a year and wants to retire at that level, they would need to have at least $540,000–60% of their working income–to live 20 years in retirement.

“Retirement’s scary. The thought of being able to save enough to live comfortably frightens me. To know that you work your whole life, save your whole life, and it might not be enough to see you through, these are recurring thoughts for me. My husband and I do save regularly for retirement but will it suffice? Should we be doing more? With having to support all of the baby boomers approaching retirement, paying for their Medicare and Social Security, what will be left for us?”

Characteristics of generation x-ers
Americans in their 20s and early 30s–the so-called X Generation–have been stereotyped in the media as kids in low paying jobs constantly bemoaning the fact that the American Dream of their baby boomer parents will elude them. While this portrait of today’s generation is more caricature than real, it is true that 20- and 30-somethings face tougher financial challenges than the preceding generation.

• Many Generation X-ers have student loans to repay and heavy credit card debt.
• Another characteristic of X-ers is a love of everything Internet-related. X-ers are more likely to trust a financial planning website than a real person giving financial advice. The Sesame Street generation wants their information to be delivered fast and with a lot of bells and whistles.
• Gen X-ers are instilled with a highly developed sense of personal financial responsibility.
• This generation does not expect the government or their employers to take care of them. They’re not counting on Social Security.

X-ers need to start saving in their twenties, regardless of their income levels. Consider this example: If you’re 25 and invest $4,000 a year from now until you’re 65, you’ll retire with about $1 million in cold cash, assuming that you’ll earn 8% a year. If you wait until you’re 45, you’ll have to put away nearly $22,000 a year to achieve the same return.

• Contribute the maximum amount possible to your company’s 401(k) plan.
• Evaluate your investment strategy. Is it on target to provide the income you’ll need in retirement? If not, you may want to consider investing more aggressively to hopefully achieve a higher rate of return.
• Avoid borrowing from your plan for any reason.
• Consider outside investment opportunities. Consult with a financial planner for expert advice.

• Save as much as you can in your 401(k) plan. You get a tax break and company matching funds if your employer offers a match. If you don’t think you can afford to contribute much to your company’s plan, start off saving a small percentage and gradually increase the contribution over time until you’re making the maximum contribution allowed in the plan.
• Try to save into an emergency fund so you have enough money to cover three to six months of living expenses.
• Don’t wait until your credit cards are paid off to start saving. Instead, set up a program to pay off your cards over time while still contributing to your 401(k) and your rainy day fund.