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How Will I Ever Be Able to Retire?

Many 55 year olds are asking the question, "Will I be able to retire at 65 or will I have to wait longer?"  More and more, that is becoming a somewhat rhetocical question.  For many in that age bracket, the decision to retire is being influenced by outside events.  The job market is dismal at best.  I meet more and more people every day who have lost their jobs due to restructuring and downsizing. 

I am fortunate on many levels.  I currently have a job.  I earn a nice wage and have commission income as part of my compensation package.  However, since  I work in the food service industry selling a food service concept to convenience stores, I am finding more and more that many of my potential customers are in the same fix as folks that have regular jobs.  Their self-employed dream is facing the same stresses that the private sector worker is facing.  There are shrinking margins, fewer customers shopping their stores, and when the customers come in, they are spending less money per transaction.  The idea of investing $12-$20000 in a business that is not thriving is a daunting idea for many of those store owners.

So what are we to do?  For those who are fortunate enough to still be employed and for those who own their own small businesses, there has to be a shift in the way you approach operating your personal business.

Expenses that drain our cash flow have got to be addressed.  No matter what your income level, you have got to start "paying yourself first."  In light of that, it means operating as a business manager.  You have to look at the P/L statement and make decisions as to where you need to cut expenses.  At the same time, you need to look at how to increase income. 

A dollar that is not working, is a dollar that is wasted.  Having a choice of purchasing a new car for $25k is "investing" in a depreciating asset.  Why not take that same cash allocation and put it to use in a potentially appreciating asset?  But, you can never forget that if income is leaving your control faster than it is coming in, then something radical needs to take place.  Otherwise you have a recipe for disaster.

The lesson I learned when managing Coca Cola distribution centers was that once you have covered the cost of your overhead, every incremental dollar drops right to the bottom line.

How do you find those extra dollars?  A lot depends on your own expenses.  Give you one example of a savings that I made this year.  I used to be a smoker.  I gave it up.  I now have an additional $2000 a year in new cash flow.  Same with eating out during the day.  Bagging a lunch is giving me an additional $1560 dollars a year in cash flow.  Last example.  My cable/internet was costing me $145 a month.  The kids are gone.  I don't need 900 channels on tv.  The wife and I don't have time for tv.  I have internet still, but I added an additional $1000 a year by going basic tv.  I have and additional $4500, annually, to invest now. 

I can use that money to increase my contribution to my 401k program at work.  In addition to the original savings every two weeks to my 401k, I can now add that additional money and at the same time, with some forward tax planning, adjust my witholding amounts to pick up even more free cash flow. 

It's about having a plan.  Putting that plan together and executing it. 

Just Sayin'