Generational Saving Tips
Do you prefer Pepsi or Snapple? Star Trek or the X-Files? Your answer largely depends on your generation and so may your attitudes about retirement investing and saving. Baby boomers and baby busters (often referred to as Generation Xers) approach retirement planning and saving much differently.

All Roads Lead to Retirement
The baby boom generation includes people born between 1945 and 1963. Baby busters, the so-called Generation X, were born between 1964 and 1978.

For boomers, the road to retirement may be shorter, while for Gen Xers, it is fraught with more twists and turns— but it still ends at the same place: retirement. As different as the two generations appear, both need to make retirement planning, investing, and saving a top priority.

Regardless of which generation you relate to, your asset-allocation strategy should still largely depend on three factors:

• Your life stage
• Your tolerance for investment risk
• How much you can contribute to your retirement plan

Characteristics of Baby Boomers
Baby boomers have been called a lot of things: hippies, yuppies, Mom and Dad. They have also been called shortsighted and spendthrift, accused of living for today instead of tomorrow. Here is how some 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 40's and 50's.

• 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 is also a trend among boomers toward "hybrid" retirement. Boomers who started saving too late, or cannot sock away enough, will have to retire into new jobs, so they are shifting from full-time to part-time or consulting work.

Characteristics of Generation Xers
Americans in their 20's and early 30's—Generation X—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 Gen Xers have student loans to repay and heavy credit card debt.

• Gen Xers may be more comfortable trusting a financial-planning Web site than a real person giving financial advice.

• Gen Xers are instilled with a highly developed sense of personal financial responsibility—they do not expect the government or their employers to take care of them. They are not counting on Social Security.

• Gen Xers need to start saving in their 20's, regardless of their income levels. Consider this example: If you are 25 and invest $4,000 a year from now until you are 65, you could retire with about $1 million in cold cash, assuming that you will earn 8% a year. If you wait until you are 45, you will have to put away nearly $22,000 a year to achieve the same return.*

Saving Tips for Boomers
If you are a boomer, here are some tips to consider to help jump-start your savings effort:

• 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 will 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 professional for advice.

Saving Tips for Generation Xers
If you are a Gen Xer, here are some tips to consider to help out your savings effort:

• 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 do not 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 are making the maximum contribution allowed in the plan.

• Establish an emergency fund so you have enough money to cover three to six months of living expenses.

• Do not 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.