Pogo Stick Retirement Planning for the Young

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By Timothy Maurer

HUNT VALLEY, Md. (TheStreet) -- While most of my career has been spent advising the Depression-baby and baby boomer generations, I have a real sympathy for younger generations. After all, I'm a Gen-Xer myself.

I'm married (10 years in April) with two energetic boys, ages 5 and 7, so I'm right in the thick of it with many of my peers who have built their careers and financial lives in a decade marked by the highest level of stock market and real estate volatility since the Great Depression. And while financial planning for 30-somethings is often not as complex as those who've traveled at least a couple of decades farther down life's path, there is no denying planning needs for Generations X and, increasingly, Y, range the broadest spectrum imaginable in personal finance -- wills, powers of attorney, life insurance, disability income insurance, homeownership, home and auto insurance, education planning, career planning, child care, health care ...

With so many of these present-day financial planning items staring us down, who has time to worry about the future with retirement planning?

Retirement appears almost beyond the grasp of younger generations because the variables are so many and the timeline so long. Indeed, for those of us closer to the front end of our retirement journey, we're faced with a daunting task: The retirement planning "three-legged stool" -- once a corporate pension, Social Security retirement benefit and personal savings with 401(k)s and IRAs -- is now the retirement pogo stick.

It's on us -- you and me -- to fund our own retirements. Further complicating matters, doctors suggest the length of life for those in Gen X and Y may far exceed that of our parents and grandparents. But the quality of life, to the degree it is improved by cash flow, is in question because of the burden of saving.

In keeping with the rebellious tendencies of younger generations, I'm going to shed the "three-point" lesson for a more concise two points younger generations should consider for a more prosperous and fulfilling retirement:

Move

The disparity in cost of living across our great country is so vast, it's almost unfathomable. The median home price in Chevy Chase Village, a Washington, D.C., bedroom community in Maryland, is $1,022,570, and the cost of living there is 166% higher than the national average, whereas the median home price in Great Recession-bludgeoned Detroit is $65,440, with a cost of living 23% below the U.S. average.

You'll find many other interesting comparisons that aren't quite as dramatic, but more reflective of a realistic move. For example, the Baltimore suburb Parkton, Md., boasts a median home price of $444,350 and a cost of living 54% higher than the U.S. average; Knoxville, Tenn., the engaging home of the University of Tennessee, meanwhile, has a median home price of $125,930 and a cost of living 15% lower than the national average.

What's the point? You can make a decision now to take advantage of this geographic arbitrage. You can choose to live in a higher-cost-of-living area as you build toward financial independence while keeping an eye on another region to which you might like to transition later in life, giving your plan for financial independence a turbo boost. (Check out the cost of living in your area and consider others with this tool.)

Work

Baby boomers grew up professionally with an almost utopian view of retirement. They'd work for however many years and cast off the chains of employment to spend their latter years in the lap of leisure, if not luxury. They counted on that three-legged stool of retirement (pension, Social Security and personal savings).

Of course, it didn't quite work out that way.

We, however, should simply never buy this lie propagated by the behemoth financial industry, which prefers to dangle the carrot of unencumbered bliss ahead of us, keeping us hoarding in accounts they manage for fees and commissions. We should instead expect we'll be working indefinitely, and, facing that reality, seek and find the career that doesn't feel like work, but more of a calling.

We can be financially independent as early as our 30s, not because we've saved a few million bucks (although that wouldn't hurt), but because we're working because we want to, not because we have to. (For more evidence that working through retirement is recommended not only financially, but physically and psychologically, read Anne Tergesen's 2005 BusinessWeek cover story, Live Long and Prosper. Seriously.)

We as younger generations have lost the hope we'll be able to rely on someone or something else to take care of us financially in our later phases of life. But we've gained the freedom and flexibility to pursue a life that is uniquely ours. Let's enjoy every minute of it.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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