According to a study done by the Center for Retirement Research at Boston College and reported in Bottom Line, half of retirees in the future will not have enough money to sustain their current lifestyle when they stop working. That’s an increase from 44% just three years ago. Large drops in investment and home value are obviously part of the cause.
Make sure you pay yourself. You should be using revenues to fund your life style, pay your business expenses, fund retirement options to the maximum allowed by law, build a vacation fund, build future expense needs (e.g., college educations, weddings), and maintain an emergency fund to cover anything from natural disaster to prolonged illness. (And, of course, obtain intelligent insurance coverage such as disability and comprehensive medical, along with umbrella liability and errors and omissions.)
The younger you are, the better your opportunity, but the more probably you’re putting this off. Create separate bank accounts if you must, but make sure that you’re not living the good life now and creating a rough life later.
© Alan Weiss 2010. All rights reserved.