Are Financial Fires Getting in Your Way?

Have you ever noticed situations where no one is stating the obvious? It’s a bit like the emperor without clothes; everyone knows what is happening, but no one wants to be the first to say it officially.

Frequently, the obvious just gets lost in an array of related issues. With financial health, related issues may be health care, real estate values or the details of a retirement plan.

The truth is that for my generation, many current investment plans are just not in sync with desired future lifestyle plans. For example, Rachel, a fifty year old with an investment account of $500,000 that’s earning 8% (8% is an entire other article), and putting away a generous $12,000 annually, will have $991,745 after considering inflation upon assumed “retirement age” of 65.

Let’s also assume that Rachel is making $150,000 a year in salary before taxes are deducted. Now let’s look at how much money she would need to retire at age 65 assuming life until age 90, and receiving no social security or pension, to keep things simple.  In order to maintain that same income level of $150,000 annually, based on some pretty optimistic assumptions built into most retirement calculators, she will need $4,000,000, after adjusting for inflation.

Let’s do the math on that; $ 4,000,000 less $991,745 is a shortage of $3,008,255! Now you see what I mean. Of course, these numbers are just some random assumptions, and Rachel is not a real client, but these are the types of numbers I am hearing and seeing as a financial consultant.

Where are you in relation to how much money you have, how much you are putting away, and your future lifestyle goals? Have you considered this, or are you too busy putting out financial fires? Take a breath, step back, and look at the big picture. Make time to play with these two financial calculators and your own numbers.

This is not an exercise to encourage fear, but rather financial empowerment; more than ever, I believe in the power of a positive mindset, which is the opposite of fear. But sometimes we have to dive in and get really clear about where we are and what we want; then we can create a plan to make it happen.

The good news is that where there is a problem, there is almost always a solution. As I see it, increasing income is the smartest money solution. It’s a lot better than cutting costs to the bone, feeling disappointment that you have peeked financially, or settling for less than what you want in life. Opportunities abound that have never previously existed, so grab a few and get going!

Having this insight and based on feedback from Financial Woman clients and readers, I created a series of videos on thirteen different ways for increasing cash flow that we have actually used, ranging from no investment capital to more capital. The videos are being sent in the Financial Woman newsletter, Nest Egg News, so I hope they will speak to you if increasing income sounds appealing to you.