Escape The Retirement Trap (By Luthando)


A young person starting a career would brand the idea of saving for retirement a ludicrous thought. Retirement seems such a long way off. This is unfortunately one of the critical errors that most people make. Saving for retirement has to start once the first paycheck is in. Even if your working environment offers a pension plan, you should still be saving 10% of what you earn so that you can invest and grow it. To be comfortable in the golden years it is necessary to have 15 times your annual salary saved up for retirement. Most people are not even near that figure and have no chance at reaching this. The key is to work on generating multiple streams of income. This article discusses the following sources of income to help escape the retirement trap:

  1. Working income
  2. Stock market investments
  3. Residential property investments
  4. Network marketing

Working Income

This is one of the primary sources of income for most people. They work 8 hours a day, 5 days a week and take home a salary. The idea of trading time for money is not a sound one as you have no income if you are unable to work anymore. Consider if you damage one of your limbs and this affects your ability to do your job, You could be laid off or put on lesser duties which decreases your earning potential. It is very risky to rely solely on this for income generation.

Stock Market Investments

The stock market can be a source of incredible growth for your money. Many people believe that it is too risky to invest in the stock market and it is safer to give it to a financial adviser or leave it in the bank. The problem with this strategy is that the interest earned barely beats inflation and your money could decrease in value as the years progress. If an individual invests the time and effort in learning the skills from a good stock market mentor then there is a strong possibility of success. The difference that it can make to your retirement plans will be quite remarkable. To illustrate this let us use the following example of a fictitious person called Jane:

Age: 30

Expected Retirement Age: 65

Current Fund Amount: $10,000

Annual Contribution: $5,000

If the annual return is 6% then the fund balance is $634,000 after 30 years

If the annual return is 15% then the balance is: $5,737,600 after 30 years.

If the above was your retirement savings at 65 then it can be clearly seen that it makes a massive difference if you earn at 15% compounded a year. Investing in the stock market can be one of the best ways to secure a 15% growth.

Residential Property Investments

These investments are powerful because of leverage. Leverage is the ability to make a large investment with a small amount of money. In real estate, people can regularly buy a property with a 10% down payment and a 90% loan. Let us look at a specific example:

You buy a house for $100,000, pay $10,000 down and take out a loan for $90,000. You now control a $100,000 asset but have invested only $10,000.

You rent the house and this covers the mortgage payments and expenses.

The house appreciates in value 5% per year in two years and is now worth over $110,000. The mortgage value paid off is between $1,000 to $2,000.

You sell the property for $110,000 then you would receive back between $21,000 and $22,000 instead of the $10,000 you originally invested.

A better way is not to sell the house but take the $10,000 equity that you earned in the first house and use it to buy a second one so now you will have two assets going up in value and two tenants paying down mortgages. If you repeat this process then by the time you reach retirement you will have accumulated valuable assets and also an income flow from your rental property.

Network marketing

This industry is worth about 176 billion dollars a year and creates more revenue than the movie, music and gaming industries combined. The idea is for independent representatives to market and sell quality products to their network. Residual income can also be earned from the sales that people in your team make. The idea of earning income from the efforts of others is a powerful one and can lead to a very secure financial future as you will always have money coming in even if you can’t physically work. Network marketing companies also provide world-class training programs in personal development and sales techniques which can transform any person into a champion. Sales is one of the highest paid professions in the world and a person that is adept at it has an enormous earning potential. The key to success is to believe in your product and also be fearless in approaching people. Once you have these two ingredients then you will be unstoppable. Most companies pay a commission for each product sold with bonuses for hitting a sales target in a designated time period. Once you reach a certain sales target then a residual income can be achieved. Some network marketing companies will even take their top income earners on fully paid vacations to reward their efforts.


The retirement strategy of relying on a working income and a pension fund to provide a comfortable retirement is high risk. Trading time for money will never make you wealthy as you have a ceiling on the amount of income that you can earn. It is important that you do whatever it takes to acquire the skills required to generate multiple streams of income. In this article we discussed 3 alternate streams but there are many more. You can only escape the retirement trap by having more than one income stream and finding the courage to relentlessly pursue the dream of a comfortable retirement.


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