Retirement Planning

If you have been self-employed most of your adult life, you may not have planned or funded, a retirement account. And, if you are 50 years old and do not have wealthy relatives or a hefty inheritance coming your way, you are in trouble. That’s ok, you are a survivor, there is no need to panic – but there is every need to create a clear plan of action and then execute it. Here is your action plan:

Step One:  You do not want to count on social security, but you may have to, so the first step is to visit their website and find out how much you have accumulated in entitlements.

Step Two:  Determine your monthly needs during your retirement years. If you do not already have a personal budget, use this free retirement calculator.

Step Three:  Now take your monthly needs and multiply them by twelve to get your annual requirements (already done for you if you use the free retirement calculator). Now you know the annual income you will need for a comfortable retirement.

Step Four:  Determine when you want to retire, when you no longer want to “have” to work. How many years between the age you want to retire and your current age? That is how long you have to create your retirement account.

Step Five:  Now you must pick a reasonable and safe rate of return for your retirement account. The important reason to use a safe and conservative rate of return is that you do not want to run out of money at 85 with ten good years of living left in you. You can get this from your financial advisor or use 5% which is what I suggest you do use. Remember that this is the rate of return you will receive on your retirement account after you are retired and not the amount of return you will make while you build your retirement account.

Step Six:  Now, divide the rate of return you picked in step five into the annual amount you determined in step three (already done for you if you use the free retirement calculator). Now you have the amount you need to have in your retirement account (see example below).

Step Seven:  First, deduct any savings you currently have from the total you determined you needed in step six (you are fortunate if you have some current savings because it makes a big difference). Then, using the same annual rate of return you determined in step four and the number of years until you retire that you determined in step three, you can calculate the annual contributions you must deposit into your retirement account. All of this is already done for you if you use the free retirement calculator. Otherwise, you will need to use a calculator that can calculate payments and annuities.


  1. Step one equals $2,000 per month at age 65.
  2. Step two equals $6,000 per month (includes social security income).
  3. Step three equals $72,000 per year.
  4. Step four equals 20 years if you want to retire at age 70 and are currently age 50.
  5. Step five equals 5% per annum.
  6. Step six equals $1,440,000.
  7. Step seven equals $29,000 per year if you have $0 savings.

Bottom line – start planning.