Did you plan to fail? Or did you just fail to plan?
Over 90% of Baby Boomers can't retire. They have less than two years worth of living expenses in their retirement plans.
They either need to come to grips with the problem or resolve to work until they die.
Not making a decision to do something about this is making a decision, a decision to never retire.
But if you want to make a decision to do something about this but just don't know where to begin, maybe I can be of assistance.
The First Step
To paraphrase an ancient Chinese saying "A journey of 1000 miles begins with a single step."
The very first step is to assess what you have and what you need.
Adding up what you have is easy, but we'll put that off for a moment. Firstly, we need to determine what it costs you to live. We need to calculate everything:
Housing
Rent or Mortgage
Utilities
Maintenance
Insurance
Taxes
HOA or other fees
Food
Eat In
Eat Out
Transportation
Car Payment / Replacement Fund
Fuel
Maintenance
Insurance
Parking
Taxes and Fees
Medical
Clothing
Entertainment
Travel and Vacation
Gifts
Communication
Insurance
Health
Wealth
Life
Professional Services
Miscellaneous
Total
If I forgot something, put it under miscellaneous.
The thing to remember is that after you retire you have a lot more time to do things. This translates into many more opportunities to spend money. I like to say that when you are retired Every Day Is Saturday. To be on the safe side with your budget you should probably add 20% or more depending upon your expected lifestyle.
Now that you have an idea what you will need every month when you are retired, it is time to assess what you have or will have:
Social Security
Retirement Plan (how much can you draw it down monthly?)
Annuities
Residual Income (Rents, Royalties, and Profits From Investments or Business)
Real Estate that produces income or could be sold to buy something that produces income
Personal property you can sell
Cash, Bonds, Stock, and other Near-cash items
Now you are ready for the dawning of reality. Subtract your HAVE from your NEED. If you are like most people, you will have a significant shortfall.
Purely as an example, if your current budget is $8,333.00 per month (about $100,000.00 per year) your NEED is $10,000.00 per month (120% of current budget).
If you have $100,000.00 in your retirement fund, that might produce about $667.00 per month (based on an average 8% return). That with Social Security might yield $3,000.00 per month.
If you have no other assets, your shortfall is going to be about $7,000.00 per month. Not good. At that rate you will be broke in a little over a year.
Do Not Despair
It is time for a solution. There are two basic approaches: reduce NEED or increase HAVE. Actually, you may want to do a little of each.
Owning your home FREE AND CLEAR or moving to a lower cost area might help a little, but it could also put more pressure on other parts of your budget. For example, if you move from California to Florida to save money on housing you might find that your food, utilities, and travel costs have gone up. Selling your house in San Diego which has a mortgage and buying a house in Florida free and clear (no mortgage) might sound good, but the cost of visiting the kids and grandkids just went up. Plus you can't live in Florida without air conditioning. And groceries there cost more too.
Most of my solutions primarily revolve around having more, not needing less.
And most of my solutions have a ten year horizon. You do certain things now and in 10 years you will HAVE MORE.
My goal is to give you recurring monthly income (residual income) sufficient to cover your monthly needs. We accomplish this with a combination of real estate investments and multiple streams of income.
I will deal with each of these in other posts or in person. Watch for me.
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