In a recent article entitled Business Owners and Retirement Planning, on the Generational Equity web site, a startling statistic was revealed - over 40% of business owners have no retirement plans in place.
In fact, according to anecdotal evidence, this isn't all that rare. Even employees have done litle more than the bare minimum to prepare for a long and happy retirement.
The basic facts are simple enough to appreciate. We are living longer (thanks to medical advances) and mutual retirement schemes are becoming less stable (thanks to bankers greed.)
There are likely to be a number of bankers who disagree with that last statement; but they're probably not among the many, many people who lost their entire retirement fund in the recent financial crisis.
It's time, perhaps, to think about planning for oneself.
In fact, the UK government recently enacted a scheme whereby people could choose to do just that - kind of.
Reading between the lines, it seems as if, while giving earners a choice about where to invest their compulsory contributions to a pension plan, the list of approved schemes is fairly limited.
So, what's the best approach?
Money Management Lessons from the Ancients
In George S. Clason's "The Richest Man in Babylon", there are many pieces of sage advice about money management. They're presented as Seven Cures for a Lean Purse, and the Five Laws of Gold, as chiseled into a colelction of clay tablets.
The book is a great read, but one of the points to take away is the focus given to how much one should spend, and how much one should put by for retirement. Or as the book puts it, "A part of all you earn is yours to keep. It should be not less than a tenth no matter how little you earn."
The 10% rule is a recurrent theme in the teachings of both Clason and Rohn, and is an amount that is destined to be saved, and never touched, until the saver no longer has the capacity to earn.
At the same time, the book teaches that one should live on 70% of one's income, which leaves 20% seemingly unaccounted for.
Enter Jim Rohn.
Jim Rohn on Being Financially Independent
Jim Rohn once made a VHS video cassette that was sent out to various schools across the USA, teaching teenagers how to manage their income, presented as rules for life.
Titled "Three Keys to Greatness", it coveerd a lot of ground, but the money management centered around becoming financially independent. That's probably the best one can hope for at retirement age, and starting early, with small values, is the key to success.
One might not agree with Rohn's insistence that the first 10% of earnings be set aside for charity, but he also adheres to the 70% rule for expenses as mentioned above.
The other two tenths he splits between active and passive investments.
It's a theme revisited in "The Richest Man in Babylon", where the reader is encouraged to invest 10% in ventures that will make more money, but to do so only with experts in their field that have a solid reputation and plan.
So, modern retirement planning would appear to be simple enough - save 10%, put 10% to work, live on 70%, and then decide what to do with the remaining 10%.
Almost unbelievably, it works. It just takes a little effort, and some well-infomed choices.
Guy is an experienced author and writer on all manner of topics. He has written a number of books and hundreds of articles.
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