What to Do if You’re Nearing Retirement with No Money

“There is no passion to be found playing small — in settling for a life that is less than the one you are capable of living.” — Nelson Mandela

I get a fair number of questions from readers who have few financial resources and are worried about the future.

Though they tell me that they learn a lot from my advice, they feel that most of it is not for them.

Perry wrote to me, “I am 58 and in bankruptcy. Wanting information as to how to turn this around.”

Carl also reached out. He was 47 and had a net worth of only $25,000. He was not interested in long-term saving strategies. “I don’t want $1 million when I’m 70,” he wrote. “I want it now.”

If you or someone you know is in a similar situation, this column is for you.

My Friends:

You are middle-aged or nearing retirement. Your net worth is meager. Your income is barely sufficient to meet expenses. And those expenses are going up.

You can’t count on the economy to bail you out. Instead of getting stronger, it always seems to be teetering on the edge of collapse.

What to do?

Should you give up your dream of retiring comfortably one day? Should you accept the prospect of living in a shabby apartment and subsisting on ramen noodles? Should you grow bitter? Should you curse big government and big banking and big business for putting you in this situation?

Or should you take responsibility for your future well-being?

These questions, of course, are rhetorical. Yet when I read letters like these, I wonder if you see the one and only thing that can save you.

That thing is yourself — your heart, your mind and your willpower.

Yes, you are in a difficult financial situation. But you are still wealthier than 95% of the world’s population.

You might say that doesn’t help. It can. Big-time. But let’s put that aside for the moment.

Your options are limited — compared with, say, mine. OK, I grant you that.

And you are not personally responsible for our country’s fragile economy or the health of the company you work for or the industry it is in.

But you must stop and consider that however financially beaten-up you feel, the responsibility for improving your situation lies with you.

If you have any chance of a better life in the future, it must begin with your decision to be responsible for yourself.

I’m saying something you’ve heard a hundred times before: You may not have a choice about what circumstances you find yourself in, but you have a choice about how you will respond to them.

If you can take that first necessary step, what chance do you have?

I’d say a good one. Good to very good.

In fact, I believe that anyone who has modest intelligence, a strong heart and a determined will can overcome debt and the worries that come with it and become financially independent in seven years.

Why seven years?

Because when I looked at my own journey from poverty to wealth and then studied the experiences of dozens of people I’ve mentored and dozens more I’ve read about, I saw that after making a serious commitment to building wealth, almost every one of them did it in seven (or fewer) years.

I wrote a book about some of them. It’s called Seven Years to Seven Figures. You can buy a copy, but I’m going to tell you the core of it right here.

I Feel for You. I Do.

When you are halfway through your life and barely making ends meet, it seems like your only chance to become financially secure is to win the lottery (either an actual lottery or the stock market equivalent).

So when you hear some rich guy from Palm Beach telling you about what he and his rich friends are doing — buying rental properties and starting businesses — you might feel that you can’t use his advice.

But if you feel that way, you are wrong.

You are not wealthy now. And you have real financial problems. But you don’t have to let them overwhelm you. And you don’t have to give up on your dream of becoming wealthy.

No, it can’t be done overnight. And it won’t be easy. It will take time and patience. And you will probably have to change some of the thoughts and feelings you have about wealth.

But most importantly, you will have to make changes in what you are doing, since what you’ve been doing until now has only brought you to where you are.

Your Path to Financial Independence Begins With Four Simple Steps

1. Accept the fact that you are solely and completely responsible for your current financial situation.

Before you react defensively, read that sentence again. I didn’t say you are the cause of your situation. I said you are responsible for it.

By taking responsibility for your current situation — even if it was “not your fault” — you assume responsibility for your financial future. That is a good thing. Hoping for someone, something or some event to fix your problems is futile and foolish. Time, precious time, ticks on as you sit and wait.

The sooner you accept the reality that you are going to be your own salvation, the sooner your fortune will start to change.

The first and most important benefit is that you will shed any anger and frustration you have been carrying around for years. And then, gradually, as you apply your new thinking to taking action, you will begin to feel the opposite of anger and frustration. You will begin to feel financially powerful.

The feeling that you have the capacity to create wealth is the single most important tool in your wealth-building kit.

2. Forget about “stretch goals.” They don’t work. Learn the power and pleasure you can get from having realistic expectations.

I can’t tell you how many times I’ve heard people scoff at the idea of making 8% to 15% returns on their investments — the sort of returns I look for.

They tell me returns like those are “boring.” They want their investments to give them huge, 1,000% type returns. They believe that is the only way they can possibly acquire wealth.

I once made a presentation to a small group of investors about an investment I liked. My projection was that it would provide a return of 25% to 35%, with some fringe benefits.

A man in the back interrupted me to tell the audience that they would be wasting their money by investing in my idea. “Unless you can give us a 10-to-1 return, I’m not interested in what you have to say,” he announced. A few people applauded him.

It’s funny. I never hear wealthy people talk like that. It is always either people who are not yet wealthy or stockbrokers. (My interrupter looked like a stockbroker. And I think he probably signed up some clients after my presentation.)

Yes, 10-to-1 returns happen. But they rarely happen in the stock market. Your odds of building a fortune by seeking out 10-baggers (as they call them) are about the same as playing the lottery.

Know this: 7–10% is a high rate of return. If you get an 8% return, for instance, you’ll double your money every nine years. If you get a 10% return, you’ll do it in a little over seven years. You can get very rich by doubling your money every seven years.

Think of it this way: Warren Buffett — the most successful investor of all time and one of the richest people on the planet — has averaged an annual return of about 20% on his investments over his entire career.

Expecting to make 1,000% returns in a short time — 50 times what he has made — is just plain foolish.

Are You Setting Goals... or Dreaming?

We all have dreams about wealth. We all carry movies in our minds about how life could be for us in a better world.

Failing to live your dreams is not necessarily a bad thing. Lots of people are perfectly happy dreaming of one life but living another.

The problem arises when the gap between fantasy and reality results in unhappiness or even depression. When this happens, it’s time to plan a new life. And the first step is to establish goals.

Goals are different from dreams in four ways. They are specific, actionable, time-oriented and realistic.

1. Specific: Being rich is a dream. Developing a $1 million net worth is a goal.

2. Actionable: Winning the lottery is a dream. Starting a small side business is a goal.

3. Time-Oriented: Developing a $1 million net worth is a goal. But developing a $1 million net worth in seven years is a better goal.

4. Realistic: Developing a $1 million net worth in seven years is probably reasonable. Developing a $1 million net worth in four months is not.

Goals are also different than objectives — more long-term and broader in scope.

Anyone looking to change their situation in life should break their goals into seven-year and one-year goals, monthly and weekly objectives and, finally, daily tasks that will make it possible to achieve medium-term objectives and long-term goals. For example:

Seven-Year Goal: Develop a $1 million net worth in seven years.

First-Year Goal: Eliminate $36,000 worth of debt.

Monthly Objective: Start a small internet side business to net $36,000 by year-end.

First Week’s Objective: Decide on a product you can source and sell.

First Day’s Task: Read an instructional guide about sourcing products.

3. Forget about “Mark Cuban.” Understand how wealth builders really create lasting wealth.

The public today has been deceived on this important point by reading stories about individuals who invested every cent they had in a business idea that exploded into a billion-dollar bonanza.

These are great, inspiring stories. But they aren’t normal. For every person who got rich this way, there are 999 who went broke doing the same thing. 

I’m not diminishing these guys. They were brilliant and shrewd. But they were also rare exceptions.

As I’ve been telling readers since I started writing about creating wealth, it is very difficult to become wealthy by investing all your time and energy into one thing — one asset, one business idea or one stock.

Yes, there are people who get very rich that way. But they are the rare exceptions. The vast majority of wealthy people get rich by a multifaceted approach to wealth building.

Open your mind to the fact that your path to wealth will be the “well-trodden one.”

That is the path that begins with the recognition that every day you make dozens of decisions that in small ways make you richer or poorer.

That is also the path that demands that you make wealth building a priority in your life and that you give it the time — the focused, positive time — it takes to build wealth.

It is the path that requires you to master at least one financially valuable skill — marketing or selling or creating desirable products or managing others to produce profits.

And it is the path that runs through, not around, the fundamental logic of wealth building, which is that you must strive always to increase your net investable wealth by increasing your net investable income.

4. Recognize that the journey to $1 million is earned $100 at a time.

Don’t try to increase your net investable income with big, brave ideas that have little chance of succeeding.

To find an extra $10,000 to invest, you don’t need to come up with a $10,000 idea. It’s easier and smarter to come up with several $100 ideas and then repeat them over and over again.

The world of wealth is governed by universal dynamics: supply, demand, greed, etc. These dynamics are as old as civilization. Winning the wealth-building game is about recognizing and exploiting those dynamics, not denying them.

I’ve always thought that my responsibility to you as my reader is to highlight those dynamics and then help you make smart, enriching decisions. The sort of decisions that have made men and women wealthy for thousands of years.

My friends... it’s not fun to realize — in the middle years of your life — that you haven’t acquired the wealth you want.

But the good news is that you can begin to change your fortune today by taking the four steps I just outlined.

And you can take all four of those steps in the next hour.

I’m serious. Do these things now:

• Accept responsibility for your future. Stop complaining about making “only $27” or “only $15” or “only $8” per hour. That’s more than many people make

• Give up the foolish notion that you must get rich “now.” Be happy to earn 8–15% on your investments. Realize that if you only make 6–8% returns, you will be ahead of the vast majority of your fellow investors

• Take time right now to list at least 10 ways that you can increase your income. Don’t worry about whether they are practical for the moment. Just list them. If you can go beyond 10, go for it. What you are doing is not so much charting your path but teaching your heart that you have almost endless options

• Commit to becoming a little bit richer every day. Start slowly. Five dollars. Even a buck. Roughly figure out what your net worth is now and then think about how you could be $1 or $5 richer tomorrow. Think about that not just now but every time you have to make a decision, big or small. This little practice will turn you into a wealth-creating machine

• Do one small thing to become a little richer today. It could be anything, from working an extra hour instead of watching TV to buying a book on business rather than a video game. Recognize that you have the same 24 hours that everyone else has. Some of those hours you are currently spending on earning your current living. But some of those hours you are wasting. Invest those hours in you. Cast aside the comfortable shoes of victimization. Put on the working boots of a financial hero.

If you are willing to do these things today, I am very confident you can and will achieve your wealth building goals.

You have plenty of time to increase your income and grow your net worth. Don’t assume that all is lost when you have a wonderful life ahead of you, a life that can be rich in so many ways.

Everybody in your situation has the same choice: You can complain about it or you can dedicate yourself to changing it.

You have here in these simple steps the essence of what you need to get your gravy train moving.

But remember — you are the engineer. Nobody can do it but you.