Point Your Employees Toward Financial Freedom
Could the person in this story be one of your salespeople?
A 39-year-old salesperson recently told me that he earned a six-figure income last year. He said that he had never dreamed that he would earn that kind of money in a single year. As a reward to himself for posting such a successful performance, he purchased a new truck, a bass boat and went on a golfing trip to Cabo San Lucas in Mexico. The salesperson is not married.
As he and I began our interview, I asked permission to ask a few questions about his financial situation and he agreed.
“If you don’t mind my asking, how much of last year’s income did you invest?” I asked him.
“I know I need to begin saving for retirement, but so far I’ve not invested any at all. Right now, I have only about $5,000 in a money market account.”
“How much monthly income would you guess you’ll need to retire comfortably?”
“I really haven’t thought about it much. Right now, I spend $6 - $8,000 per month, depending on how much I earn. So in retirement, I don’t know, I’d say at least $5,000 per month.”
“At what age would you like to retire,” I asked.
“I enjoy what I do, but I also enjoy playing golf and bass fishing. If I had my way about it, I’d retire no later than at 65.”
“That gives you, let’s see, 26 years to save enough to meet your $5,000-per-month income objective, right?”
“Yeah, that sounds right. So how much do I need to have in the bank to have $5,000 per month to spend by age 65?”
“Do you mean before taxes or after taxes?”
“I’d need to earn $5,000 after all income taxes are paid.”
“Well, based on history, the stock market has averaged somewhere between 10% and 11% in annual growth. And assuming that income tax rates stay the same as they are today, my guess is that you will need to have approximately $1 million invested by the time you’re 65.”
“Wow. I never dreamed that I’d need that kind of money just to earn $5,000 per month.”
“One thing we haven’t factored in are your social security benefits, but even with social security, you need to get started putting some money away, wouldn’t you say?”
“There’s no doubt about that. Who can help me design a plan that will guarantee that I’ll not be destitute when I finally do retire?”
“I’ll give you the names of two or three financial planners. I suggest that you interview each of them and select the one you feel most comfortable with. Will you do that?” “You darn right I will. Thanks for opening my eyes.”
OLD AND POOR
Early in my career, my boss taught me the power of compounding; that is, the power of investing a portion of my income each year and allowing the compounding effect to build a small nest egg into enough to take care of me in retirement.
“Being young and poor is not so bad. You’ve got the rest of your life before you. But being old and poor stinks,” he told me. It is totally up to you and the amount of discipline you have in your life to invest a portion of what you earn. In the USA, no one with financial discipline should ever be old and poor.”
DO YOUR EMPLOYEES A FAVOR
Invite a financial planner one who is good on his feet to present a short seminar for your employees. Do your part to teach each of them how easy it is to become financially independent IF they start early enough, and how difficult it is to reach their financial goals if they wait to late.
Could the person in this story be one of your salespeople?
A 39-year-old salesperson recently told me that he earned a six-figure income last year. He said that he had never dreamed that he would earn that kind of money in a single year. As a reward to himself for posting such a successful performance, he purchased a new truck, a bass boat and went on a golfing trip to Cabo San Lucas in Mexico. The salesperson is not married.
As he and I began our interview, I asked permission to ask a few questions about his financial situation and he agreed.
“If you don’t mind my asking, how much of last year’s income did you invest?” I asked him.
“I know I need to begin saving for retirement, but so far I’ve not invested any at all. Right now, I have only about $5,000 in a money market account.”
“How much monthly income would you guess you’ll need to retire comfortably?”
“I really haven’t thought about it much. Right now, I spend $6 - $8,000 per month, depending on how much I earn. So in retirement, I don’t know, I’d say at least $5,000 per month.”
“At what age would you like to retire,” I asked.
“I enjoy what I do, but I also enjoy playing golf and bass fishing. If I had my way about it, I’d retire no later than at 65.”
“That gives you, let’s see, 26 years to save enough to meet your $5,000-per-month income objective, right?”
“Yeah, that sounds right. So how much do I need to have in the bank to have $5,000 per month to spend by age 65?”
“Do you mean before taxes or after taxes?”
“I’d need to earn $5,000 after all income taxes are paid.”
“Well, based on history, the stock market has averaged somewhere between 10% and 11% in annual growth. And assuming that income tax rates stay the same as they are today, my guess is that you will need to have approximately $1 million invested by the time you’re 65.”
“Wow. I never dreamed that I’d need that kind of money just to earn $5,000 per month.”
“One thing we haven’t factored in are your social security benefits, but even with social security, you need to get started putting some money away, wouldn’t you say?”
“There’s no doubt about that. Who can help me design a plan that will guarantee that I’ll not be destitute when I finally do retire?”
“I’ll give you the names of two or three financial planners. I suggest that you interview each of them and select the one you feel most comfortable with. Will you do that?” “You darn right I will. Thanks for opening my eyes.”
OLD AND POOR
Early in my career, my boss taught me the power of compounding; that is, the power of investing a portion of my income each year and allowing the compounding effect to build a small nest egg into enough to take care of me in retirement.
“Being young and poor is not so bad. You’ve got the rest of your life before you. But being old and poor stinks,” he told me. It is totally up to you and the amount of discipline you have in your life to invest a portion of what you earn. In the USA, no one with financial discipline should ever be old and poor.”
DO YOUR EMPLOYEES A FAVOR
Invite a financial planner one who is good on his feet to present a short seminar for your employees. Do your part to teach each of them how easy it is to become financially independent IF they start early enough, and how difficult it is to reach their financial goals if they wait to late.
posted by zzzzzzzzzzz at
9:40 PM
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