Planning
Ideal Retirement
An ideal retirement is one that produces the income needed to pay all of the overhead with extra income for the fun things that you want to do like travel, hobbies, gifts and your children, etc.
Roy and Meredith Henry at the Panama Canal 10/2009
I can’t tell you how much income you need. Only you would know that.
Steps to get started
Start right now!! The sooner you start the better your retirement will be. You should save between 10% to 20% of your income now. If this is a problem you should consider changing your life style. If you are not doing this, there is something wrong with what you have set up.
Many families buy too big of a home and spend all of their money maintaining it. Other areas in your budget, like spending, can be changed to give you extra money to start saving for retirement. When our children left home we downsized. We sold our big home and used part of the money to buy a condo/villa that fit our needs. The remainder of the equity was used to fund part of our Retirement Plan with a lump sum. We like our villa better than our big home. Everyone should lose the “Status Symbol” of a big home.
You should max out your 401k up to the match your company gives. The 401k should match - if not, you should not do a 401k. You should take out a Roth IRA for the max. The Roth IRA is Tax Free forever. You should then save as much as you can in other investments, with some tax favored.
Let’s review four things you can do to find the 10 to 20% you should be saving for retirement.
- Spending
- Credit Cards
- Credit Score
- Home
Lets look at details to help you fix any problems you may have.
1). Spending - Get spending under control. Set up a real budget and follow it. Stop using credit cards if you can’t pay off the full bill. It may make sense to get a 3 or 5 year loan from the Lending Club (see the Tools section) and pay off the credit cards in full and have just one payment that could be lower. Stop going out to eat as often and look for places that have good food but lower prices. Also ask yourself this, “Do I really need this?” The goal is to stop the spending leak.
2). Credit Cards: The goal is to pay off any balances and use only if you will pay in full the balance each month. If the problem is bigger, get a 3 to 5 year loan, which in most cases will be the same or lower but you will be debt free in 3 to 5 years. If the problem is even bigger, then you may need help from experts who can help you lower your debt and set up one lower payment. Please check out, http://roysdebtsolutions.com/. This does not increase your costs, but this helps our Foundation.
3). Credit Score: The goal is to raise your score. I have found that it is very hard to work with the 3 credit agencies. I recommend you look into working with www.specializedcredit.com. Repairing your credit score can save you 1000’s of dollars in lower interest costs. Tell them that we sent you and once again you help our Foundation, but do not raise your costs.
4). Home: This is a hard one to do. Many families have bought a home too big for their income. If the mortgage, taxes, maintenance and repairs costs are more than 25% of your income, you may be over spending in this area. You should work on the first 3 and then make changes in this area if possible. Many families are downsizing and find that it really improves their lives. This change in life style will make you very happy in the long run. You may lose equity in the sale of your home but you will make some of it up on the lower price paid on the new home. This is a big step but well worth the effort.
Live it up and never run out of money
You should never take more than 5% to 6% of your investments as income each year.
Using a million dollars as a bench mark, we can take out $50,000 to $60,000 per year in income. It is very simple to set your goals based on the income you want. As an example: If you want $100,000 per year, you divide by .05 or .06. At 5% you will need 2 million dollars in your retirement plan. At 6% it would be just under 1.7 million.
This may sound impossible but it’s not!! You can do it if you set your mind to it. Set up a life style that makes you happy without any “Status Symbols” or “Over Spending” built in. Do what the numbers tell you. The information on products will help a lot, and is free!
The right way to deal with money
Money is a tool for you to use. Money by itself will not make you happy. You must put it to work, and keep watching it, so you can stop working in retirement.
I feel this is a principle in the Bible and it is what God wants us to do. Don’t worship money; make it your partner - put it to work for you. Some people think money is the answer. It is not the answer. The true answer is to have money work for you as a partner.
Let it compound until you reach your goal for retirement. At retirement the money earned will produce the income you need for life. Remember the 5%-6% rule should be followed.
If you have set up your retirement plan right you don’t have to worry. I will show you the tools and products that will make your retirement plan work. I really want to help you!