Retirement Income Can Bring Freedom OR A Life Sentence — Your Call
Posted @ 8:41 pm - Filed under Purposeful Planning, Retirement, Retirement Income, Investment Lessons, Goals, Tax Shelter
Had an invigorating conversation today with a hard working guy from the South. He owns his own business and works incredibly hard, as does his wife, also self employed. I found their situation almost profoundly moving by the time we’d finished fleshing out their current status, as it related to their potential for retiring when and with how much.
Keep reading and ask yourself if you begin seeing your own situation?
He and his wife are 40-something, have three kids, each a year and a half from the next. They’re all about to enter college, one after the other. His business does well, and he loves working, but lately has begun to hear the ticking of his very own unrelenting Big Ben. With less than $60,000 in his 401(k), his savings aren’t providing sweet dreams either. It is nice that between them they earn a little over $150,000 a year. But before you start wailing about how you only make $55,000, let’s be real here for a second.
Tick Tock.
That figure is before taxes. Also, following the Grandpa Economics playbook almost verbatim, they paid off their home’s mortgage via double payments, about six months ago. Wow. Their retirement is shaping up to be something out of a Stephen King novel.
Oh, come on BawldGuy, quit being so dramatic. Geez.
Oh yeah? 
Even if they were to magically end up with half a million in their retirement plan in the next 15 years, it would require an annual return of over 15%. Get real. But let’s give that to them. Let’s also say they’re able to guarantee that half million will yield 8% yearly when they retire — forever and ever. That’s a whole $40,000 a year — before taxes. Add another $12,000 in SS +/- (don’t laugh), and they’ve set up a retirement on a fixed income of $52,000 — a life sentence. Their home will offer no tax shelter of any consequence. Their kids are long gone. Pretty much? They’re running the income tax streets naked.
OR
They could follow the Purposeful Plan I’ve already got ricocheting off the walls of my hairless skull.
Ask yourself a question, but first put your hands in front of you, palms up, so you can do the either/or ’scale’ thing.
Would you prefer to be guaranteed, upon retirement, $60,000 a year pre-tax for life AND a free and clear home OR Have a house payment AND retirement income well into six figures MOSTLY tax sheltered or tax free — for life?
Take yer time, no hurry.
Does this describe you? If so, there are two ways to respond. You can keep the current inertia going, and live the same life so many of your retired friends and relatives are already living, uh, enduring. OR You can realize it’s not yet too late to convert time into your friend. ‘Cuz at this point? Time is a lot of things, but it definitely ain’t yer friend.
Tick Tock.
Your first step is to contact me — just locate the Contact BawldGuy thingy near the top and to the right-center of this page. Let’s make time your friend, OK?
This entry was posted on Sunday, April 27th, 2008 at 8:41 pm and is filed under Purposeful Planning, Retirement, Retirement Income, Investment Lessons, Goals, Tax Shelter. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.