The wealth ratio in the main thing you should focus on if you want to develop and happy retirement. Now why is this ratio so important over just getting a million dollars set aside. The answer is quite simple - most people don’t save money for the future.

Without money in savings bringing in monthly income automatically, you then have to develop other means to get to a point where the wealth ratio is one or greater.

Increasing Your Wealth Ratio

How can you do this? There are a number of ways. Many people are focused on the numerator which is having the money set aside. However, you can increase this by working on both the income and expense portion of the ratio.

On the expense side, you should look at your nonessential items you are spending money on every day. This could include soft drinks, lattes, coffee, lunches, snacks, etc that you might not even think about before you buy them. If you were to write down these items over the course of a week, you might discover that you were spending between $5 and $10 a day.

Other Nonessential Expenses

Now look at the expenses you have each month that aren’t really required. Do you need all of the options from the cable TV service? What about having multiple phone service (cell phones and land lines)? How about the services you have on your phones? Could you get by with less options and still live comfortably?

Get Out Of Debt

The next area to work on is reducing all your debt to zero. Yes that’s right - zip, nada, absolutely nothing. When you do this, your monthly expenses will be amazingly low. One good friend of mine who has a nice seven figure net worth told me that if you had everything paid for, you could live like a king on $2000/month.

How do you get the debt paid off? You can get a detailed step by step video of this by going to the retirement cures main page and getting the free retirement planning training that we offer.

Lower Expenses Means A Larger Wealth Ratio

When you lower your expenses, it takes less automatic income to get the wealth ratio to one. Let’s look at this a little closer. If you apply the principles we just shared and get your expenses to less than $2000/month, you would only need to have $200,000 earning you 12% annually. If you don’t cut your expenses and you have expenses of $4,000/month, you now need to have $400,000 working for you at the same annual rate.

Which Do You Think Is Easy To Do?

Save an extra $200,000 or cut your expenses and pay off your debts. If you are honest with yourself, you will know it is easier to do the second option and can be done in a shorter time frame.

Choose Wisely

Now the choice is always yours. Regardless of which you pick, your focus should stay on the wealth ratio and getting above one.

Until next time…

Retire Early or Work Until I’m Asked To Retire

Many people who are over 50 are usually looking at this question in one form or another. If they leave early, will they have enough to live on for the next 30 years. If not, how long can I work until I have to retire. The choices could seem endless. However there is one factor that you can rely on to be an accurate indicator to answer this.

Wealth Ratio

What the heck is that? The wealth ratio is a simple division problem. Yes, we’re sure you are saying, “Don’t make me have to do math!”. This is a real simple calculation. You take the automatic income streams you have that are not generated by your working and divide them by your expenses as shown below:

Wealth Ratio = Auto Income/Expenses

What Automatic Income?

This is something that most people don’t think about when it comes to retiring. They just think about having a large sum of money in the bank and their problems will just seem to go away. We wish it could be that easy, but the fact is that without a steady stream of income that comes in automatically even if you are sleeping is what you need to focus on in this lesson.

Where Do I Find This Income?

If you started to put money aside when you were younger, you could be well on your way. Assuming you could get a 12% return on investment, you could be generating $10/month for every $1000 you have saved. If you have $100,000 saved, you have an automatic income of $1000/month. Can’t live on that? Hmm…what can you do to make it possible to live if you only have $100,000 or even less saved?

What are your thoughts on this?

Post your comments and share how you would get by.

Tomorrow, we will continue to look at this scenario and show how working with the Wealth Ratio will help you be able to retire early so you won’t have to work the rest of your life.

Until next time…

You work all your life. You deal with life’s various challenges. Now that you realize that it may be getting close to the end of the road for your working years, you realize you are a member of the No-Savings Retirement Plan. Not a fun place to be in whether you are 45, 55, or 65 years old.

What Can I Do To Begin A New Plan?

The first step is always to create a new mindset about how things are going to be. Many people put their head in the sand and just say, “Woe is me”. This is not the time to do this. Action and lot’s of it will make changes in your life to help address these issues.

What Plan Should I Follow?

A retirement savings program is covered in the Free audio training which Retirement Cures offers its readers. In this plan we show you how to reduce your expenses. In some cases, this is can get you on the right track. I have friends who have fallen into this situation. Those that have listened to me, have been able to make their lives much more enjoyable. Those who have not are still struggling today.

What Things Are You Struggling With In Your Plan?

Do you have challenges in getting to the point where you want to be for retirement? If so, why not share them or any other comments related to this topic in the Comments Section of this post.

Until next time…