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Today, that formula has drastically changed—probably forever—for most Americans. For starters, the high-paying factory jobs that characterized the industrialization of America have, in many cases, moved beyond our borders. And, in a world characterized by corporate mergers, consolidations, and downsizing, the idea of working for one company long enough to draw a meaningful pension is almost laughable. So millions of well-intentioned Americans have invested their hard-earned savings in retirement accounts that were filled to the top with investments that were euphemistically called "growth funds." Unfortunately, too many mutual fund managers, many of whom had never seen an honest-to-goodness bear market, were heavily invested in companies that were long on business plans but short on profits. When the dot.com bubble burst, many Americans were confronted with the fact that 12% annual rates of return on mutual funds were not ordained by God. Thousands of companies folded, the money that had been poured into poorly planned ventures was lost forever. And so, quite rightly, was investor confidence in the mutual fund as the cure-all for retirement planning (see New York Times article). What, then, is a middle-aged person to do? One option, of course is to just keep on working, and for many, that option is the only one available. The harsh reality is that too many people of retirement age simply cannot afford not to keep working. But even well-paying jobs often leave little room for savings after taxes. The total tax bill for middle-income, home-owning taxpayers—including sales tax, federal taxes, local taxes, and income tax—approaches 50% of take-home pay. Mortgage payments, insurance, and family expenses often claim the rest. Hopefully, there is something left over for savings, but where should one invest? That’s a very good question indeed. Savings accounts are safe, but their returns after taxes are virtually nil. Real estate remains a solid, if somewhat non-glamorous investment, and the ownership of one's home remains the best investment a family can make. But, one’s home equity provides no real liquidity (if you’re tempted to take the advice of the dreadful TV commercials that advise you to place a second mortgage on your home in order to add siding to the house and take a cruise to the Bahamas, remember that debt, by any other name, is still debt). Unfortunately, the above problems are insoluble for millions of Americans, but not for a few hundred Publishing Partners at ELP. An important component of the ELP business plan centers on the belief that hardworking Partners can invest nothing more than a single dollar plus their time and energy to build a viable business. Plus, as owners of their own franchises, ELP franchisees need not worry about corporate downsizing or financial shenanigans in the corporate boardroom. ELP seeks to help partners create annually recurring revenue streams that can take the place of savings accounts. And how much savings would be required to generate $36,000 per year at 4% interest? The answer, amazingly, is $900,000. But a well-run franchise can earn that much or more with surprisingly little effort after the first year. So the choice is simple: save $900,000 from your paycheck (and if you’re like most of us, you’ll need to live several hundred more years to do so), or start your own ELP franchise and keep working until it is a rip-roaring success. Like most great opportunities, this one is limited and will soon be gone . . . forever. Act accordingly. For more articles that discuss the looming retirement crisis, click here. |
