Baby Boomer Retirement Plan

Tom "Big Al" Schreiter's book "Big Al Tells All" includes a chapter called "The Case of the Missing Retirement" which I am going to summarize here. The numbers might be a little different, as this book was written in 1985 and revised in 1999, but I think you'll get the idea.

The Story of Joe Office Worker

Big Al talks about a fictitious person named Joe Office Worker who is 58 years old. He never saved or planned for his retirement, and suddenly it had snuck up on him and was staring him in the face. He had just 7 years to produce a retirement income that he could live on.

Joe did have something to work with: He had a company pension plan that would pay him $550/month, and he would be eligible for Social Security benefits of about $750/month. So he had about $1300/month to work with, which would just barely cover his living expenses.

How was Joe going to make up for lost time and start saving for retirement?

He wasn't. He was going to create some extra income to allow him to live comfortably. In order to do this, he started a part-time home-based business. He wasn't super successful, but was able to make about $800/month in profit.

Joe saved this money for one year, and used the $9600 as a 10% down payment on a $96,000 house. The house rented for $1200/month and after taxes, insurance, and expenses he had $1000 left to service the $86,000 mortgage.

Joe had a 7% mortgage and decided to pay off the house in 6 years so that it would be free and clear when he hit 65. In order to do this, he had to pay $1500 toward the mortgage. He took the $1000 from the rent and added $500 from his home-based business income to pay the $1500.

At the end of six years, the house was fully paid for and because of appreciation was now worth $130,000. He sold it to a friend for no money down, and gave his friend a 20 year, 8% mortgage with payments of $1100.

Now his financial retirement picture looked much brighter.

Pension plan - $550 + Social Security - $750 + Mortgage from Home - $1,100 + Home Business Income - $800 for a total of $3200.

Just $800/month income from his part-time business allowed Joe to retire with a much better income than he would have had without it. Now imagine if he had started 8 or 10 years earlier. By reinvesting the income of each house purchased, Joe could easily have retired on $50,000 per year or more.

So, what's the point?

Just this: think outside the box, and never give up, thinking it's too late to get started. This scenario is doable for most people. Just like Joe, finding a way to make even a little extra income could make this feasible for you. What you'd like to create is "residual income", or income that continues to come in month after month, even if you're not working. In Joe's scenario, that was the rent from the house, and possibly the income from his home business.

Remember, if nothing changes, nothing changes. Decide to do something, and get started today!

I'm a baby boomer. I was born in 1956, making me 52 at this moment. Right smack in the middle of the baby boomers. According to Wikipedia, baby boomers were born between 1946 and 1965. So I epitomize the generation. Probably in more ways than just my age.

I've been self-employed for 23 years, in one way or another. I've tried many different things, some more successful than others. I love it! Problem is, I don't have a company retirement plan. I have been able to put about $20,000 into an IRA, and while that continues to grow, I really don't seriously believe that it will reach my "retirement number" by the time I reach 65. So I've started down another path.

I recently read an article called Why Your 'Number' Doesn't Matter that really hit the nail on the head.

I need to think income, not lump-sum!

The realization that I've come to is that I'm going to be working for the rest of my life! Maybe not in the traditional sense, but I am going to have income coming in until I die. That doesn't mean I'm going to be doing a 9 to 5 - I'm not. But I am going to be productive and active.

There are many different ways to create income in your retirement years. I'll outline a few, just to give you some ideas.

1. You can get a reverse mortgage on your house. If your house is paid off, or close to it, you can borrow against the equity and either get a lump-sum payment or monthy income for the rest of your life. You don't have make payments, as they come out of your equity. When you die, whatever equity that remains becomes part of your estate.

This is a good plan for the older boomers who bought their houses when prices were low and they haven't continued to refinance and take money out. It only works if you've got a bunch of equity. For someone my age, and younger, it might not be such a viable solution since I paid a premium for my house and don't have enough equity. But in 10 years, who knows? It may end up being part of my plan.

2. Another option is a part-time job. If you've got some pension and social security income, maybe a job at a fast-food place or as a Walmart greeter would be enough to help make ends meet. This might be the right option for some people.

3. You could purchase a franchise of some sort. There are all kinds of opportunities out there if you're willing to pay the upfront costs to get going, and put in the time and effort to get it off the ground. More information on this below.

4. You could start a home-based traditional business. This could be a great option for you, especially if you've got some hidden talents! Maybe you're handy with woodworking, you could build birdhouses and sell them on Ebay. Speaking of Ebay, there are many ways to make money on that website or other online auction sites. Click here for a list of books on this subject.

5. Online Affiliate Marketing. This is a great way to make a lot of money, and if you work hard to get it set up you can reap the benefits for years to come. Truly residual income, that's the best kind, because it gives you time freedom. Basically, what you are doing is promoting other peoples products and earning commissions based on people that buy because of your recommendation. I like this business plan a lot! Therefore, I'm going to be devoting more time to this topic below.

6. Network Marketing. Here is a way to create residual, leveraged income - and a lot of it - with very little upfront cost, in your spare time, and with hardly any monthly overhead. Network Marketing has been around for many years, and most people have had some kind of experience with it - either positve or negative or both! Whatever your experience, you need to read on down this page to see how Social Networking and Attraction Marketing has totally changed this industry to make it a much more attractive option for many people than in the past.

Any of the above might be for you. Everyone's different - different skills, different desires, different mindsets. But do something. Don't wait till the last minute, now's the time to start - it's really never too late!

We know that retirement is more and more looking not like a number to achieve (due to our economy's instability), but a time of continuing or residual income.

So What Can We Do For Residual Income?

Let's explore one option for ongoing income, franchising. Wikipedia defines franchising as this: Franchising refers to the method of practicing and using another person's philosophy of business. The "franchisor" authorizes the proven methods and trademarks of his business to the "franchisee" for a fee and a percentage of gross monthly sales. Various tangibles and intangibles such as national or international advertising, training, and other support services are commonly made available by the franchisor. Agreements typically last five to twenty years, with premature cancellations or terminations of most contracts bearing serious consequences for franchisees.

McDonald's is a franchise. So are Grease Monkey and Merry Maids.

Finding a Franchise Right for You

The key to finding a franchise opportunity that is right for you is research -- lots of research. First, decide how much of an investment you are willing or able to make. Initial fees can range from $1,000 to more than $200,000, and then there are the other typical start-up costs, from real estate to equipment.

The average initial franchise investment is $250,000, excluding real estate, though there are franchising opportunities available for smaller investmen - and the average royalty fees paid by franchisees to the franchisor range from 3 to 6 percent of monthly gross sales. The average length of a franchise contract is 10 years.

Before finalizing your decision about buying into a franchise operation, include your family in the deliberations, because being the owner takes a lot more time and energy than you might think -- and your family will be most affected by your workload.

You'll also want to consult with other experts as you make final preparations for buying a franchise. You'll at least want a franchise attorney to assist you with understanding all the ins and outs of the franchise contract. And you'll also want the assistance of a business consultant to help you develop a business plan, both for yourself and for any financing you may need.

How much does it cost to open a franchise?

McDonald's costs:

Total Investment: $655,750-$1,225,000 ($250,000 must be non-borrowed personal resources)
Initial Franchise Fee: $45,000
Royalty Fee: 12.5%+
Advertising Fee: N/A
Term of Agreement: 20 years
Renewal Fee: $45K

Grease Monkey costs:

Total Investment: $203,000-$253,000 (franchisee must have $500,000 net worth)
Initial Franchise Fee: $30,000
Royalty Fee: 5%
Advertising Fee:
Term of Agreement: 15 years
Renewal Fee: $5K

Merry Maid's costs:

Total Investment: $23,400-$54,500
Initial Franchise Fee: $19,000-$27,000
Royalty Fee: 5-7%
Advertising Fee: Not available
Term of Agreement: 5 years

Finally, if you are a true entrepreneur, then owning a franchise is probably not for you. You'll want to start your own business so you can be free to develop your own concepts, brands, systems, etc.

Remember we are looking at the fact that retirement is more and more looking not like a number to achieve (due to our economy's instability), but a time of continuing or residual income.

Let's explore another option for ongoing income, during retirement: home-based businesses.

Per Kathleen Tweeten, Community Economic Development Specialist, a home-based business is not for everyone. However, it can be an additional income source for retirement.

Seventy-eight percent of business owners stated that having more control over their lives was an important reason for starting their own business. So, even though you may not get rich from such an endeavor, you may want to try your idea out to see if it would be successful. Remember, entrepreneurs may not see a profit right away; it will depend on the type of business.

Factors to consider when starting a home business.

Determine if there will be a market for your products or services and if it is even feasible. This is crucial before a large amount of money is spent. Too many businesses fail because people do not test their market plan and manage the business properly. Information from Link Research in a 1996 survey of 5,000 Home Office Computing readers reported that 20 million businesses found the most challenging business tasks to be 1) marketing to gain additional business; 2) time management; 3) financial record keeping; 4) avoiding overhead when possible; and 5) assistance in managing varied responsibilities.

Also, are you looking to be able to step away from the business and it will keep making money, the definition of residual income? Most people who are retiring do NOT want to be stuck to a desk or business but have the flexibility to work from wherever they are - read Hawaiian beach here!! Or not work at all, and have your business keep generating income.

Obtaining good advice can help prevent you from making expensive mistakes which often lead to failure.

Self-discipline is very important. Working for others means that many responsibilities are shared with other employees. Being in business for yourself means you carry the whole load. Some people don't want all of the responsibility of licenses, regulations, taxes, insurance, keeping records, advertising and pricing, etc. Are you willing to take on these responsibilities?

A home-based business may cause problems within the family. You need the full support of your family. They need to take you and your business seriously. What help can you expect or do you need from family members? Use of their money, skills and time often make the difference between success and failure.

Choosing the Business

Ok you've decided to move forward. So a home-based business can be either product-oriented or service-oriented. To determine your business, examine your interests, skills and abilities, education/training, and experiences.

Product-oriented businesses are usually two types: a) selling products made by you, family members and/or employees (like raw materials such as fabrics or tanned leather, kits like yarn/pattern and knitting needles, partially finished items like unpainted bird houses or completed articles such as jewelry and belt buckles) or b) selling products manufactured by others and either purchased by you for resale or sold on an order basis.

Services may involve performing a service at the place of business (word processing, tutoring, bookkeeping or child care) or at another location (house painting, carpet cleaning or consulting).

In the book Home Based Business for Dummies, there is a list of 10 good home-based businesses. They include computer-repair technician, bodywork/massage therapist, computer tutor, coach (business or career), technical writer, elder caregiver, virtual assistant, personal chef, Web-site designer, and pet sitter. Teach any skill you have that someone else wants.

Depending on the business, you may find it very confining, stressful, expensive and physically exhausting. On the other hand, being on your own can be very stimulating, financially rewarding and satisfying.

What is Affiliate Marketing?

Affiliate Marketing is simply earning a commission by selling someone else's products on the internet. This can be anything. One of the most well-known and first affiliate programs was Amazon.com. This is also an example of a program that you can use to earn money. All you have to do is go to www.amazon.com and sign up as an affiliate. Then, you can put links or banners to the Main Amazon page or to any of the products they sell on your websites or in your emails. If someone clicks on your link or banner and buys a product, you get a commission.

Is Affiliate Marketing a type of Network Marketing?

Affiliate Marketing is very similar to its cousin, Network Marketing, in many ways. In fact, affiliate marketing could be called MLM, or Multi-Level Marketing, in some instances. Some companies pay you commission on everyone you sell to. These would not be considered MLM's. Other companies also pay you a lesser amount on anything that someone you sold to sells. These are called "two-tiered" affiliate programs, and they would be considered MLM's, since they pay on more than one level.

An example of a two-tiered program is Wordtracker. This is a program that helps the internet marketer find good keywords to promote his website. If someone signs up to use this software, at the current time they're going to pay $59/month. Your commission is 15%, or $8.85. If that person signs someone else up to use the program, your commission for that person would be 5%, or $2.95. It may not seem like a lot, but remember, you'll receive that every month as long as your 2 levels of customers continue to use the product. Plus, as you attract more and more people to the product, the monthly payments can really add up!

What are some other types of Affiliate Marketing?

Affiliate Marketing can be used to sell just about anything. I recently was introduced to a product called "Total Transformation" which is a set of CD's and DVD's designed to help parents manage challenging behaviors in children and teenagers. My wife and I listened to a couple of the cd's and found them to be extraordinary. Since I was so impressed, I decided that this was a product that I could promote, and got on Google and searched for "total transformation affiliate program". Sure enough, there was a program set up where I could earn a very hefty commission of $85 if I referred a customer to their website. (The commission goes up to $100 if I sell more than 5 in a month!)

Another way to build an affiliate marketing network is to go through Clickbank or Commission Junction. These are 2 "clearing houses" for digital products like websites and ebooks. If you sign up with Clickbank or Commission Junction, you can promote any of their thousands of products and services. This is pretty neat, because you can search the site and see what fits with your individual interests, hobbies, or talents. Remember, all you have to do is send people to the website - you don't have to have any inventory, ship anything, nothing! Super simple.

Do I have to buy the products to promote them?

Some companies require you to buy their product first in order to be allowed to promote it, but most don't. However, that doesn't mean you shouldn't buy the product first. It's always better to have used something if you're going to promote it. People are going to be much more willing to buy if you can say "I use this product and I love it", rather than "I heard this product is pretty good".

How do I get started?

One good way is to sign into Clickbank and set up an account. You are then able to promote anything they have. Next you're going to want to buy a book (a list of possibilities is below) or download an ebook with some step-by-step instructions on how to actually find people to buy. Here is the link to an ebook you can download with more valuable information. (By the way, that ebook is a product that I'm an affiliate for, and so are the books from Amazon. See how it works?)

How do I promote?

There are many ways to promote an affiliate program. You can talk about it to people and if they're interested, you can give them your personalized link to the website that sells the product. This is the "low tech" way.

A "high tech" way to promote is through the use of niche marketing. This means to create small websites, blogs, content pages, or ezine articles talking about the product. Then you tie these articles together using links, anchor text, and keywords so they rank high on the search engines. A free step-by-step course in how to do this is avaiable at Renegade University.

This is a big business and a big opportunity, if you're the type of person who likes to work at home on the computer.

Do you want to make a difference in the world? Do you like the idea of helping people? Would you like to have free time in your retirement years, and the finances available to allow you to do the things you want to do?

If you answered "yes" to the above questions, maybe network marketing is the ticket for you.

This much-maligned industry has been around for many years, and most people have a pretty strong opinion about it - either they love it or they hate it. Quite often, the same person can both love it and hate it at the same time!

What's to love about Network Marketing?

You can make a difference. Many network marketing companies produce high quality nutritional products or weight loss products. If you are promoting products like these, you're helping people stay healthy, which is a good thing for everyone. Plus, because of the nature of the business, you can also help those same people become financially free, too.

You can do it. Almost anyone can start their own business. You don't need any special skills, training, or education.

You can afford it. It usually costs less than $1000 to get started, sometimes much less. The monthly expenses are low, consisting of purchasing some of the products to either use yourself or to sell at retail to others. Typically, network marketing companies produce unique, high quality products that you will want to be consuming anyway. The other monthly expense is for promotion, which might be brochures, CD's, DVD's, or websites. The cool thing about the new method of promotion, Attraction Network Marketing, is that there are ways to generate additional income to help you offset those monthly costs, and possibly even make some additional profit. This is called monetization.

Residual Income. Once you sign up people to purchase the products on a monthly basis, you'll continue to earn commission on everything they buy for as long as they buy it. This is the aspect of network marketing that gives you time freedom.

Leveraged Income. The other creator of time freedom. In a network marketing company, you sign up other like-minded individuals into your organization doing the same thing that you do. The neat thing is, any work they do, you get paid for. Plus, if they sign up people, you get paid for those people's efforts, too. Eventually, you could have thousands of distributors in your organization, and you get paid a percentage of everything they buy. This is called leveraged income, and it's the one thing that makes network marketing stand out from any other home-based business. If you have 1000 people in your group and each one is working for one hour a day, you're earning income on 1000 hours per day of work. Pretty hard to do that by yourself, right?

OK, so why would I hate it?

Network Marketing is hard work. In an effort to sign up distributors, some networkers portray this business as an easy way to get rich. While it's true that you can get very rich, it's definitely not easy. It involves a learning curve as to how to promote the business, and it involves building up an organization. Chances are you won't make any money for the first year in the business, and it may take up to five years to be earning a sizable income. But if you do stick it out to that point, you could have it made for the rest of your life.

One way to avoid this problem is to monetize your business. This is the process if bringing in money from alternate sources to help you pay your expenses while you build up your primary network marketing business. I discuss this option more later in this lens.

Rejection. Definitely the biggest killer of dreams in the network marketing industry is rejection. Networkers have been taught to approach their friends, their family, their neighbors, basically anyone they come in contact with about joining their business. Then, when they've alienated all those people they're taught to buy cold leads and start calling people they don't know. While this does work, the percentage of people who say yes is very low and most people can't handle the no's.

Fortunately, with the emergence of Web 2.0 and the phenomenon of social marketing on sites like Myspace, Facebook, and Youtube, new ways of prospecting are being developed to avoid rejection and actually get people calling you to find out about your business. If you're interested in pursuing a network marketing business, you really need to read the free report The 7 Great Lies of Network Marketing.

There you have it. If you don't mind working hard and can handle the fact that it will take a while to build up your income, network marketing might be for you. For more in-depth analysis of this topic, visit the website Network Marketing 4 Today.

Some people refer to Affiliate Network Marketing as kind of a hybrid program you administer yourself combining the best aspects of Affiliate Marketing and Network Marketing. That's not what I'm talking about when I refer to Affiliate Network Marketing. What I'm talking about is using Affiliate Marketing to support your Network Marketing business while you build it up. You create kind of a synergy between the two, and they work off each other. When you throw the concept of Attraction Marketing into the mix, then you have something really powerful.

How does this all work together?

As I explained above, network marketing is the best source of residual, leveraged income available to the ordinary person. The downside, however, is that it takes a while to build up your network marketing business to the point that you're making money. During this time, expenses can add up and drive you out of business before you "make it".

This is where Affiliate Marketing comes in. If you are able to generate $200 - $500 per month in income from various affiliate programs, you can sustain your network marketing business until it gets rolling.

In addition, the rejection factor is huge in determining most people's success in network marketing. If you're marketing to friends and family, or calling purchased leads, you're going to hear "no" a lot. If you can't handle that, you're going to quit.

One solution to this problem is the concept of Attraction Marketing. This is the other piece of the puzzle. If you can get people to seek you out, people that want to see what you have to offer, than you can eliminate the rejection factor. The best way to do this is to gain their trust by sharing valuable information about things you know before you ask them for anything. In fact, the less you ask for, the more people trust you and are willing to listen to what you have to say.

This is the route I've decided to take.

I've been a network marketer for many years. I've stuck with it because I can see the big picture about how it can give me the time freedom and financial freedom that I want when I retire. I have experienced my share of rejection and the problem of more money going out than I had coming in. There have been times that I've quit for a period of time, only to come back because of that big picture.

Then I stumbled upon the concepts of Attraction Marketing and Monetization. This made a lot of sense to me, so I began to implement it. It's already started to bring me in money, and it's fun and easy. And guess what - no more rejection!

This is the Web 2.0 method of network marketing, and it's going to change the landscape of the industry forever. If you want to learn more about this concept, some good books to read are Magnetic Sponsoring or Building on a Budget by Mike Dillard, and The Renegade Network Marketer by Ann Sieg. These 3 books do a great job of explaining and teaching Attraction Marketing and Monetization.

If you want free step-by-step tutorials to guide you through every aspect of the process of setting up yourself as an expert, in order to attract interested people to whatever business you choose, I've put together a website to help you get started called Renegade University. If you can see the value of a network marketing business, I strongly suggest you review some or all of these resources.

That's my take on the subject of the Baby Boomer Retirement Plan. Thanks for looking, and feel free to comment on any or all of what's included in this lens!