When it comes to retirement planning, I have come to two conclusions: I could fiendishly save my pennies, pretending to be Ebenezer Scrooge and Scrooge McDuck's love child, or I could rely on the brain trust in Washington to preserve my Social Security benefits. As I looked at the current financial state of the nation, I opted to go with door number one.
Of course, my insight about the state of Social Security in 30-plus years is about as good as anyone else's, but I feel more fiscally comfortable saving as if it won't be there, hedging my bets on having an income in retirement versus not having one.
I Plan to Live Until I'm 100
While I don't actually plan to live until I am 100, that is how I am managing my money. The longer I plan to live, the better hedge of protection I have against rising health care costs, inflation and even giving myself the wiggle room to splurge on a trip or two.
Since I want to retire at 65-years-old (perhaps even before then), I figured I'd need approximately 35 years worth of income at higher than my current level if I wanted to enjoy my retirement without ever having to utter the words, "Hi, welcome to Wal-Mart."
The Math Bit
I make $82,000 a year. I rounded my number up to $90,000 a year for safety's sake.
$90,000 x 35 years = $3.5 million dollars.
In case you missed it, I need to save $90,000 a year ($7,500 per month) for the next 35 years in order to retire. That was enough to leave me with a sizable lump in my throat. However, I needed to figure out a solution, instead of getting stuck on the problem.
Hedging My Bets
Aside from letting my kids go hungry and living without running water or electricity, saving $90,000 a year is all but impossible for me. However, I do save between $16,000 and $20,000 of my money each year, religiously, and have been doing this for the past five years. My liquid savings left me with just around $90,000 (ironically enough) to start socking away for retirement.
Spreading My Wealth
I put half of my money ($45,000) in an IRA and a separate annuity, netting around 5 percent each year in interest. Using Bankrate.com's savings calculator, if I just let my money sit in that fund for 35-years, I would make it to $286,000. If I added my regular savings contribution of $1,300 per month to this mix, my stash climbs to $1.7 million by the time I retire.
That's good, but not good enough. I need $3.7 million, remember?
For some folks, diversifying a portfolio means playing the stock market. However, the stock market isn't really my scene. I play a little, but only with an amount of money I am comfortable losing. Instead of throwing my money into the DOW or NASDAQ, I went with what I know: franchises and real estate.
I used my remaining $45,000 to buy into two franchises, for $10,000 each. With my remaining $25,000, I purchased a small investment property that I earn around $3,000 a year from, as a rental.
Since my franchise businesses are bringing in upwards of $4,500 in additional (unexpected) personal income each month, and since my rental brings in an additional $3,000 per year, I am earning my investment back in less than 12 months. This year I will walk away with $57,000 ($12,000 in pure profit), which I will use to invest in additional franchises, thusly creating more streams of recurring income that will last me from now until my golden years.
If I continue on my current course, my franchises will pay me $1.9 million dollars in 30 years, if not more, getting me right on the edge of my $3.7 million dollar goal, while giving me resources to create multiple streams of added monthly income post retirement, thanks to my outside-the-box thinking.
When it comes to my retirement, I believe that investing in me is a far better option than crossing my fingers for the sustainment of a dwindling social program. If I relied on Social Security alone, I'd be living on $48,000 a year, most likely waving at you while wearing a blue vest as you enter the local Wal-Mart. That isn't how I want to retire. Because of that, I'm keeping my retirement plans (and money) in the hands I trust the most: my own.
*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.
More from this contributor: