Recs

4

A Disastrous Retirement Scenario

A Sicilian man recently lost his primary source of income and access to his home. At 61 years old, this was a tough break, and sadly, he needed police intervention to get his life back to normal.

What makes a sad story comical?
There's more to this story, though. This gentleman's income? An allowance from his mother.

His home? His mother's, actually.

And did I mention that he was 61?

That's a disastrous retirement scenario
Certainly, moving back in with Mom and Dad can be a great way to save a few bucks. That's especially true if you're young or saddled with debt and stuck in a job that doesn't pay well.

If you find yourself as a young adult living with your folks, there are a few simple steps you can take to ensure a rosy financial future:

  • Pay off debts that are keeping you from being independent.
  • Invest as heavily as you can for your retirement while your costs of living are low.
  • Don't touch your retirement cash until you're ready to retire.

If you follow that guidance, it'll be more or less certain that you won't need to rely on an allowance from your mother once you hit age 60. For instance, if our 61-year-old Sicilian had stuck $100 in each of these companies in 1971, check out what he'd have by now:

Company

$100 Invested on
1/4/1971 Became

Eastman Kodak (NYSE: EK  )

$231.44

DuPont (NYSE: DD  )

$2,737.95

Caterpillar (NYSE: CAT  )

$3,709.55

Consolidated Edison (NYSE: ED  )

$8,502.08

Johnson & Johnson

$10,896.67

United Technologies (NYSE: UTX  )

$22,261.29

ExxonMobil (NYSE: XOM  )

$23,611.11

$700 turned into ...

$71,950.09

Includes dividends and spinoffs. Data from Yahoo! Finance.

That's not a bad haul from a one-time outlay of $700. Just imagine what his balances would be if he'd saved along the way and invested on a regular basis.

No excuses
The reality is that most Americans nearing retirement (right around age 61) are in better shape than our Sicilian friend mooching off his mother. But don't get too excited -- the average American is still facing a pretty gruesome retirement fate.

That's why it's imperative that you kick your retirement plan into high gear. If you're young, living at home, and have many years ahead of you, be steadfast with your savings and take advantage of the powers of 401(k)s, IRAs, and compounding interest.

If you're well into your working years -- or even if you're in your early 60s -- the most important thing you can do is develop a game plan. Don't lament the late start or plan to just work for the rest of your life -- figure out what you have, what you need, and how to get there.

For tips, tools, investment recommendations, and a suite of discussion boards where you can ask questions to your heart's content, I urge you to join us at Motley Fool Rule Your Retirement. We'll help you get on the right track to the comfortable future you deserve. You can try the service for the next 30 days, free of charge.

This article was originally published on Aug. 9, 2007. It has been updated.

Fool contributor Chuck Saletta wonders whether it's still a bad idea to match wits with a Sicilian when death is on the line. At the time of publication, Chuck owned shares of Johnson & Johnson, which is a Motley Fool Income Investor recommendation. The Fool's disclosure policy has developed an immunity to iocaine powder.


Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 609182, ~/Articles/ArticleHandler.aspx, 9/22/2014 4:17:53 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Chuck Saletta
TMFBigFrog

Chuck Saletta has been a regular Fool contributor since 2004. His investing style has been inspired by Benjamin Graham's Value Investing strategy. Chuck also can be found on the "Inside Value" discussion boards as a Home Fool.

Today's Market

updated 2 days ago Sponsored by:
DOW 17,279.74 13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASD 4,579.79 -13.64 -0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/19/2014 4:04 PM
CAT $102.51 Down -1.83 -1.75%
Caterpillar, Inc. CAPS Rating: ***
DD $71.25 Up +0.05 +0.07%
E.I. du Pont de Ne… CAPS Rating: ****
ED $57.13 Up +0.50 +0.88%
Consolidated Ediso… CAPS Rating: ****
KODK $24.80 Down -0.49 -1.94%
Eastman Kodak Comp… CAPS Rating: *
UTX $108.45 Down -0.07 -0.06%
United Technologie… CAPS Rating: ****
XOM $97.12 Up +0.51 +0.53%
ExxonMobil Corp CAPS Rating: ****

Advertisement