Wednesday, February 24, 2010

Retirement Planning: We Know We Should Have Started Earlier

Baby Boomers know better than most.  We know we should have started younger.  In fact, we know we should be doing more now for our retirement now. Start in your twenties, blah, blah.  Invest aggressively blah, blah, blah.

We have wasted the following examples on the youth: If you begin in your twenties and put away $5,000 a year, every year, faithfully until you retire, you will have a 401(k) worth in the neighborhood of about $700,000.  Of course this also relies on a steady growth in the markets of at least 5%.

But what if you missed that initial decade?  What are the chances of reaching that amount?

Since the vast majority of us missed that decade, how much more would we need to get it back?  It is important to understand, this "invest in your twenties" adds the miracle of compounding to the mix. It allows markets to correct even as you are afforded more risky investments.  What goes up in other words, really goes up and when it goes down, it doesn't fall as a far.

Older folks on the other hand, witness direct changes to their invested dollars when markets recede making the pain even more real.  

To read more about how to get back that missed opportunity...

Paul Petillo is the Managing Editor of and a fellow Boomer

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