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Baby boomers are closing in on retirement. What does that mean for everybody else?

A whole new ballgame begins soon as baby boomers hit the age of 60. That means about 77-million people will reach retirement age during the next 20 years.

Sheila Johnston, U of L College of Business

"People are retiring earlier than in the past even though they're living longer."

Sheila Johnston teaches accountancy at the University of Louisville. She says when boomers retire they'll gobble up social security. Her warning for younger Americans—begin putting more away right away.

Johnston continues

"People think 'I'm too young,' or 'it's so far off.' They don't understand that's the best time to save. It's so much easier. An individual doesn't have to save a lot of money if they start early."

Johnston says compounding will help your retirement savings grow in a big way.

Johnston adds

"It grows tax-deferred, which means the government is giving you money and letting you earn more without taxes until the money is withdrawn."

And if you can afford to put a little extra in the pot then do it. Johnston says one of the biggest unknown factors is the cost of health care.

Johnston continues

"Health care cost is the wild card for people getting ready to retire. It will cost a lot. A couple retiring at 65 will need about 190-thousand dollars just for health care costs."

johnston says save now so the money is there later. This is critical because social security is shrinking, pensions are falling and health care costs are rising.

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