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Baby Boomers: Is Network Marketing the Answer?
(Before you read this post, you need to know that I am not a financial advisor and don’t play one on TV. This information is provided to help my fellow Baby Boomers consider alternatives for funding the retirement they thought they were going to have before the economy tanked. You need to do your own due diligence and consult with whomever you think appropriate before you take any action that could affect your financial future.)
A colleague of mine (we’re also both Baby Boomers) recently referred to our generation as “the generation that will have to work forever.” At first, I thought he was just venting his frustration over the current economy, but he prompted me to do some thinking and a little digging into what the last 30 years have been like for retirees.
Treasuries Aren’t the Answer
Thirty years ago in 1982, the interest rate on 10-year Treasuries was hovering around 10% (coming off a 15% all-time high the year before). Anyone retiring with $1 million in savings would have earned $100,000 a year or $8,333 a month. Today (July 26, 2012), the rate of 10-year Treasuries is around 1.5%. That means if you retired today with $1 million in the same investment, you would earn $15,000 a year or $1,250 per month. That’s right at the 2012 U.S. poverty guideline for a family of two.
Preservation of capital is a concern for retiring Baby Boomers. With these longer-term securities there is a real chance that you could lose a significant part of your principle if interest rates increase (which some say is a likely response to current economic conditions). The problem is that if you go to the short-term notes the interest rates take a real nose dive. Over the same 30-year period, the interest rate on 26-week T-bills went from a nominal 11% to around 0.15%. (Yes, that’s 15/100th of 1%.) That would get you a whopping $125 a month from your hard-earned $1 million savings.
Higher Yielding Investments Generally Put Capital at Risk
And, of course, there are higher-yielding alternatives, but they also come with higher risk that you could lose a big piece of your $1 million principle. So, let’s assume the FOREX market is not a viable option for most retirees.
In the good old days, retirees could consider taking equity out of their homes if they needed extra money. Today, the 50+ age group, which includes the Baby Boomers and their aging parents, has the highest incidence of foreclosures and are more likely to be “under water” on their mortgage than any other group.
Dip into the principle? Sure, but then you have to worry about outliving your nest egg.
More Baby Boomers Are Becoming Entrepreneurs
Is it any wonder that as more Baby Boomers reach retirement age, they looking at starting their own business as a way of bridging the financial gap? And a surprising number are turning to home businesses, both online and offline.
Network marketing offers an attractive alternative that anyone concerned over their retirement finances should consider. Among the benefits the industry offers are:
- Very affordable start-up and operating costs,
- Potentially significant income tax deductions,
- Ability to work anywhere, anytime,
- Ability to build a substantial income on a part time basis while still enjoying being semi-retired,
- Income potential that far exceed investing in short- or long-term government securities,
- The potential to build a business that will generate an income that can continue, even increase, after you stop working,
- The potential to build equity in your business that may be valued at up to 200 times your residual monthly income,
- Personal growth and development,
- A lot more fun than being a greeter at the local Big Box store!
It’s probably an alternative that Baby Boomers should seriously consider to supplement (or even create) their retirement income. And if you’re not approaching retirement, the industry is worth considering as a means of generating additional income to decrease your financial dependence on a traditional job and to fund other investments.
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Dave Strayer
dave@davestrayer.com
Skype: dcstrayer
Work with me: Numis Network
P.S. – If your upline doesn’t have a step-by-step plan for your success, you need to check this out now!
Image(s): FreeDigitalPhotos.net
Tags: baby boomers, Network Marketing, retirement
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