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I hope that I am not the first person to inform you that Social Security is not going to be here much longer. If your retirement plan is depending on SS, it is time to switch plans. SS was a perfect system when it was first rolled out. At the time, the life expectancy was 67, which meant retirement was only 2 years long. This also meant that 25 workers were contributing to the SS funds for every retired person. In 20 or so years, however, only 2 people will be working for every 1 retired person, who is now living to almost 90 years old. The math will show that this source of income for seniors is going to dry up rather quickly. This means that the only way to retire is to self-fund your own retirement. There are many ways to accomplish this. If your company has a pension plan, wonderful, but we know that that is not common practice. The stock market, 401K’s, real estate, saving money you were already spending and running your own company are all effective ways to help build your retirement nest egg, but before we look at each of these, we need to know how much money we are going to need to retire on. When you retire, you do not want to have any risk of losing your money, so you are going to put it in low rate, guaranteed investments, such as CDs returning say, 3%. Let’s also say that your desired retirement income is $90,000. At three percent return, we know that it is going to take 3 million dollars to return $90,000! That is a lot of money, but not far out of your reach, once you understand how money works.
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