Young People Today Need to Retire Young

Elimination of SSI and Pensions for People Under 30

Let's face facts pension plans and social security will not be there when a person under 30 years old, a young money maker is ready to retire. Even if social security is around it will not be enough to maintain a minimal standard of living- mature people on SSI today can attest to that fact. So the option to retire young may not exist.

We are already experiencing these trends today. According to a CNN Money article, 43 percent of working-age households are not likely to have enough retirement income to replicate their current standard of living. In addition, the past 10 years has seen an enormous reduction in pension plans offered to employees. Only 46% of all workers were covered by a defined benefit plan in 2004. These statistics will continue to deteriorate as we move forward and the opportunities to retire young will decrease.

Employers are replacing pension plans with contributory retirement programs. Unfortunately, according to a report of the National Association of State Boards of Education, "most workers with access to these contributory programs are not participating sufficiently to allow them to retire in their sixties without suffering a great decrease in their standard of living."

So what does this mean for you or your children? "It means you will likely have to self-fund your retirement, and you're going to need to learn the skills necessary to do so. "Self-funded retirement" is the corporate fat cats and politicians favorite word. It alleviates them of the monetary strain and makes you 100% responsible for your financial future. It means that you need to help them become young money makers in order to secure their financial future!

How much will our young money makers need to retire comfortably?

After calculating the long-term inflation rate using the Consumer Price Index (CPI), which averaged 3.1% annually, from 1925 through 2006, a young adult today will need a minimum of $1.3 million in order to retire on about $33,000 annually (today's dollars, adjusted for inflation and salary increases). This is assuming they live to be 90 years old. However, with the improvements in medicine, many experts feel we will live beyond that mark, so just planning to live to 90 may not be enough. And $33,000 annual income per year is not a lot of money to enjoy the golden years.

Now here's the good news.

Help your children become young money makers. Starting to invest as early as possible will give a huge advantage. Just investing $73 per month, starting at age 18, and average a 12% return they will have over $1.3M by the time they reach retirement age. Now if you add a piece of real estate and save more as you get older you will be in excellent shape for retirement.

4 Keys to today's young money makers to Retire Young:

o         Start retirement planning early - Harnessing the power of compounding interest while you're young will give you a tremendous advantage. The earlier you start the greater the snowball effect your investments will have, the better the chances you'll retire young.

o         Invest early and consistently - Making regular contributions to your investments will lower your risk and help you generate long-term wealth.

o         Tax free investment vehicles -Roth IRA's may allow you to withdraw money at retirement tax-free.

o         Real estate. It provides a great hedge against inflation, greater leverage and can earn you a steady stream of monthly passive income checks.

The thought of funding one's own retirement makes a lot of people nervous. For the people that start early and stay consistent will enjoy the benefits of being able to afford the lifestyle they desire today plus avoid the worry about how they are going to be able to afford retirement and perhaps retire young.

Vince Shorb gives young people the practical advice they need to retire young in his new course 'Financially Free by 30'. Get your free video tips on how to retire young at www.FreeBy30.com.