TUESDAY CHALLENGE: YOUR BIGGEST CHALLENGE!
As a Certified Financial Planner, I have to draw your attention today to what I consider is the greatest challenge among small business owners and that is retirement. Current statistics show that in excess of 60% of all small business owners are not on track to save the money needed for retirement.
I believe that one of the myths that exist about retirement is that your overall cost will be greatly reduced. You will notice that I use your existing annual expenses as your basis for starting this exercise.
Your challenge for this week is to follow the steps I outlined below and see where you are on your retirement planning journey:
- Without making any adjustments, determine what your annual income is for the past year, your expenses for the past year, and how much you have added to your saving this past year.
- If you added to your savings, subtract the amount from your income from last year.
- If you broke even, use your income from last year to complete this exercise
- If you lost money last year, add the amount you lost to your annual income.
- In all cases, you will end up with a base income that you currently need to live on.
- Next determine your current “liquid assets”. This includes your retirement plan/savings and any other savings that you have.
- Now determine any ongoing retirement payments (benefits) you will receive from past employment or other sources. Figure this on an annual basis. I deliberately left off social security. I use that (if it continues to exist) as an emergency contingency fund.
- From your current amount that you need per year to live, subtract the amount of retirement payments (annual) that you are scheduled to receive.
- If the figure shows that you will have more income already in place for your retirement, than you are currently using, you are a winner.
- If you fall short, divide the shortage into your retirement saving to see how many years you can currently survive.
Although this is only a rough estimate of where you are in your retirement planning, it will give you something to work towards or some satisfaction that you are on the right track.
Being in control of your finances is a great STRESS RELIEVER!
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