February 18, 2010

Now, here's a Real Retirement Plan...

There are a lot of bogus bankers and others out there who say they have your "best interest at heart" when it comes to retirement...but we all know that this just can't be true when you look at the facts.  We know now that pensions don't really work in today's market and are subject to being raided by CEOs and other top level managers who want to use that cash for company "operating expenses".  Which is why pensions are on their way out.

Other plans such as the 401(k) can kill your American dream if you're unlucky enough to retire during a recession such as this one - in fact you may have to keep working just like today's soon-to-be-retirees are until the economy fully recovers...or at least until their 401(k) bounces back from the ashes.  But we know how the well being of our 401(k) plan is subject to the profits and well-being of other companies - (Americans are angry at the large bonuses and salary of CEOs - yet we keep handing over our money to them via investing in our 401(k)!)  The more cash companies have on hand for operations, or the higher their EPS (earnings per share), the better it is for employees and investors.  But the more cash the CEO and other top level execs take in their own pay, which is approved by the board of the company, then it means less money the company has for other operatives...and that means a worse outcome for employees and investors.  Weird huh?

But the way to retirement is simple:
  1. Pay off debts - yes all of them!
  2. Make more money
  3. Invest

Being debt free is key - imagine if you could put all of your salary in the bank?  And when you have enough built up in an emergency fund, imagine how much more money you could invest in real estate?  commercial properties?  energy contracts?  Because you dnt have a car note, no mortgage, no debt....life becomes simpler.  It may seem like a fairy tale but it is possible and the real way to retirement.  Maybe an early retirement.  Dave Ramsey has the best method of achieving a debt free lifestyle in his book Total Money Makeover, where he instructs you to pay off your small debts first and work your way up to the bigger ones.  It is called the "debt snowball" method - because as you pay off the small debts, you'll then have more cash to pay off the larger debts.

As I explain in my latest book, Black Insolvency, (which has just been picked up by Amazon.com by the way!) the wealthiest people in the United States have a small amount of debt...only about  7%...while the remaining middle class and poor people have between 20% - 70% of debt!  So if you want to be like the wealthiest people in America, well, then get rid of that debt!

And be on your way to a real retirement plan...your own!


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