Archive Tip #2:

      
If you are anxious about not being able
      to afford to retire:

      
1. Draw up your current financial picture
      using my summary form and instructions
      on this website.

      
2. Look at the amount(s) you have in
      your retirement funds. Assume that you can use 8% of the investment
      return from these funds to live on in retirement, and multiply
      the 8% by the total of all your retirement funds. If you have
      other investment funds, multiply the 8% by the total of these
      funds. (NOTE: My 8% assumption is based on your making a total
      average annual return of 10% or more on your funds.)

      EXAMPLE: If you have $100,000 total in retirement funds (eg.
      Independent Retirement Acounts, 401k's, 403k's Pension Funds,
      Profit Sharing Funds, etc.), you multiply that amount by the
      8% investment return, ($100,000 X 8% = $8,000). If you have $50,000
      in other invested funds, you would have $4,000 ($50,000 X 8%
      = $4,000) in additional income to add to the $8,000.

      
3. Divide the total amount of income
      by 12 to get the average monthly income from these funds.

      EXAMPLE: If you have $8,000 retirement income and $4,000 income
      from other invested funds, you would have $12,000 in total annual
      income ($8,000 + $4,000 = $12,000) and $1,000 in average monthly
      income ($12,000/12 = $1,000).

      
4. Calculate the amount of other retirement
      income you would receive from social security, part-time work,
      etc.

      EXAMPLE: You might have $900 in monthly income from social security
      (NOTE: You can call your local social security office and find
      out the amount).

      
5. Total your average monthly retirement
      income from all sources.

      EXAMPLE: Your total monthly income in the two illustrations above
      is $1,900 ($1,000 retirement investment income + $900 social
      security).

      
6. Replace your current monthly income
      on your Single Page Financial Summary
      Form with your total monthly income in retirement.

      EXAMPLE: Assuming on your Summary your current monthly income
      is $2,500, you would replace this with $1,900.

      
7. Compare your retirement monthly income
      to your current monthly expenses to see if your retirement income
      is enough to maintain your current lifestyle.

      EXAMPLE: Assuming your monthly expenses are $1,900 (including
      taxes) or less, you can feel secure that you can afford to retire.
      If your monthly expenses are more than $1,900, you need to look
      at the possibility of reducing your expenses in retirement or
      getting a part-time job to make up the difference.

      
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© 2000, Frederick
      S. Brown. All rights reserved.