New Year's Resolve!
It's a new year, and with everything new comes opportunity. Opportunity to review many areas of our lives or businesses and make that hopeful list of resolutions that always start out with best intentions and then vanish into the oblivion because of our routine and daily demands. Of course the magic question is why? While this question may be better suited for philosophers and psychologists, my humble opinion points to two areas: resolve, and grandeur. Let me offer a couple facts, and areas in our financial life that we as individuals, and or business managers should feel a resolve to improve upon, and are not too grand to incorporate.
According to recent government statistics1, annual incomes for people age 65 and older are < $25,000 for 59% of our population, and 18% are between $25,000 and $40,000. So, almost 80% of our population is living on $40,000 or less a year. The main sources of income for this group are: Social Security - 39%, Earnings - 26%, Pensions - 20%, Assets - 13%.
To improve upon our resolve, let me embellish on these categories, in order:
- - Social Security: you may have heard about some of the concern here
- - Earnings: money from - still working or going back to work. (i.e. not retired)
- - Pensions: what your employer(s) saved for you on your behalf
- - Assets: what you and I have saved on our own.
A simple retirement income formula: Annual Income = #1 + #2 + #3 + (#4 * 5% estimated value). Resolution List:
- Save more: up your percentage to your company retirement plan or enroll if you are not already participating. You may be missing free money!
- Save taxes: look into funding your IRA or Spouse's IRA and/or Roth IRA. You may contribute for 2006 up until April 15, 2007.
- Business Owners: review your retirement plan in 2007. Are you utilizing a Profit Sharing Plan to improve your bottom line and employee retention?
- Save first, not last: waiting to save what is left over generally leaves nothing. Start small; make sure it's doable, and be resolved to get it done.
Happy New Year, and best wishes for 2007