Want to be financially free and quit working?

Step 1 - Determine when you want to retire. Do you want to retire in ten years, eight years, five years from now? Grab a pen and a piece of paper then write down exactly when you want to retire. Include the day, month as well as the year. For example, if you want to retire in ten years from now, write the following: "I will be fully retired by" (today's date plus ten years). If today's date is August  21, 2009, you would write "I will be fully retired by August 21, 2018". Knowing when you want to retire is a critical first step because without knowing when you want to retire, you have no time line destination. You're like a ship without a rudder aimlessly floating around the ocean.

Step 2 - Determine how much money you will need to retire. Experts agree that a retiree will need 70 to 80% of their current income for every year they plan on being retired. It would be wise to plan on at least 80% to ensure you have enough to cover increasing health care costs. If your annual household income is $60,000, multiply $60,000 by 80% which is $48,000. This is how much you will need for each retirement year. Now when you multiply $48,000 by 20 years (the average number of retirement years), you come up with $960,000. You will need at least $960,000 going into retirement. Next, subtract the amount of money you have available for retirement currently from $960,000 in order to determine how much you lack.

Step 3 - Create a plan to get the money needed to retire. Let's say you want to retire in ten years and you currently have $300,000 available for retirement. Using the example above, if we subtract $300,000 from $960,000, we see that at least $660,000 is needed within ten years. In this step, you will begin to chart your financial road to ensure you reach your desired financial destination. Using straight division, we see that savings of $66,000 is needed every year for the next ten years ($66,000 x 10 = $660,000). Compounding interest will be a major factor in determining how much you need to save annually or monthly for that matter. Let's say you found an extra $500 a month either by making more money, or reducing your debt, or a combination of the two. If you were able to put that $500 dollars a month along with the current $300,000 to work for you at 10.6% annually, you would have $967,907.54 at the end of ten years. The math is too complex to illustrate here but you can punch the numbers in on a financial calculator or Excel to see for yourself.

Want to know if you qualify for a home-based business that could provide you with a life time of financial freedom?

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