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Your reaction to that question is probably, “First
things first! I’m worried about getting a job, not
about retiring!” However, understanding the
retirement situation can help you land a job
because (1) this is an important issue today,
(2) employers like to hire people who know
what’s happening in the real world, and (3) pro-
fessors often test on the time value of money
with problems related to saving for future pur-
poses (including retirement).
A recent Fortune article began with some
interesting facts: (1) The U.S. savings rate is the
lowest of any industrial nation. (2) The ratio of
U.S. workers to retirees, which was 17 to 1 in
1950, is now down to 3 to 1; and it will decline to
less than 2 to 1 after 2020. (3) With so few people
paying into the Social Security system and so
many drawing funds out, Social Security is going
to be in serious trouble. The article concluded
that even people making $85,000 per year will
have trouble maintaining a reasonable standard
of living after they retire, and many of today’s
college students will have to support their
parents.
This is an important issue for millions of
Americans, but many don’t know how to deal
with it. When Fortune studied the retirement
issue, using the tools and techniques described
in this chapter, they concluded that most Ameri-
cans have been ignoring what is most certainly
going to be a huge personal and social problem.
However, if you study this chapter carefully, you
can avoid the trap that is likely to catch so many
people.Wi l l Yo u B e Ab l e t o R e t i r e?
(^5) Time Value of Money
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