Over 50 And Going Down The Wrong Road To Retirement? There’s Time — Smile
Posted @ 12:47 am - Filed under Cool Info, Real Estate Investing, Purposeful Planning, Retirement, Cash Flow, Sominex Account, Capital Growth
How many times have you wondered how to get started investing in real estate without feeling like you’re in the latest Friday The 13th movie?
After doing this for almost 40 years I’ve seen that look before. Or maybe you’ve kept your first home since Carter was in office, and wonder if you should have done something different than just holding on to it. Read on, because I may have at least some of the answers for you. Before I start ‘answering’ questions, let’s ask some.
- Why should anyone invest in real estate?
- If I’m over fifty, how can it possibly make a difference for my retirement?
- Are you going to tell me I have to use my home equity?
Only two bottom line reasons to invest in real estate
You either want cash flow or growth. Of course, there are a myriad of reasons why folks want one or the other, but those two are the basic results investors seek. If you are going to be working for the next 5-10 years before you retire, then you should definitely try to grow whatever capital you have available.
Do you need Cash Flow?
The more capital you have at retirement, the more monthly income you can generate. It simply makes no sense to worship at the altar of cash flow before
you really need it. Most people, when closing in on retirement are earning more money than they’ve ever earned before. Or at least they’re making more than they need to live. They need to take whatever assets they have and grow them. Which brings up the age old question – What are your current assets, and how much retirement income would you like?
Increasing the Value of Your Estate After Age 50
If you are in the 50+ age group and are still working, then taking an inventory of your current assets is your first job for. What do you have which will allow you to invest and start growing? It’s never too late as long as you have either cash or other income to live on while growing your investment capital.
I have to use my home equity?
Remember, if you’re like most of us, you simply want to have a stress free monthly retirement income. The more the better of course, but surely more than if you didn’t invest, right? Right. So where’s the capital you ask?
For the vast majority of folks, it’s in their homes. If you own your home and its value is roughly $XXX,000 with a loan balance of about 60% of that or less -– you’re in good shape — or at least better shape than you might have imagined.
In 90% of my cases I’m able to help clients refinance with a bunch of cash left over while sometimes reducing their monthly payments to boot! Much of the time the reduction in payments exceeds $500 a month. In this example it would be no problem in pulling out $100,000-$150,000. So let’s say you pull out $150K.
Reserves Are Important — Crucially So
I’m pretty much ‘Old School’ when it comes to reserves. I insist my clients have an abundance of cash reserves before embarking upon what I call a 
Purposeful Plan. As a matter of fact, reserves are part of The Plan. In this example I’d probably have my client put $30K in the bank. I’ve come to call it my Sominex Account for obvious reasons. I say obvious — but have since learned from my son Josh, that if my audience is under the 40-50 range, I should be saying Ambien Account. 
I’ll pause here to mention why folks with an existing comfortable retirement would want to invest. If they don’t want more income, (kinda rare) growing their estate for their heirs has proven an attractive motivation. Most of the time, cash flow can be safely increased by simply reassigning capital to better producing investments like real estate. What’s even better, real estate cash flow is, for the most part, sheltered from income taxes. I’ve never met an investor for whom that didn’t produce a smile.
Decide on your long term goals
I’ll conclude with this final thought. Retirement income isn’t taken seriously enough in my experience. We tend to think in today’s terms and don’t realize that our retirement income is fairly well set, with few exceptions, at the time we stop earning — and make retirement our new reality.
Think about it. Are you ready to retire and live with the income you will now receive? The average person could have their home free and clear and still not live a comfortable lifestyle with their current plan. That’s not only sad, but more than a little bit scary. It’s time to take steps to insure your retirement isn’t going to have you sitting at home 12 months a year for the rest of your life.
Learn a lesson from Grandpa
We all know what folks mean when they say their neighbor retired comfortably — not nearly as well as he would have liked. His retirement was never supposed to be spent on his front porch.
I look back at my grandparents. 
Grandma didn’t work after she left the farm. Grandpa was one of the exceptions who made a solid living as an artist. (oil paintings) When Grandpa passed away Grandma moved close to one of her kids. She rented her home out for enough to cover payments and expenses. When she passed away the house hadn’t been sold, (still hasn’t, but that’s another story.) All the saving and prudent financial behavior didn’t make her retirement any better. She was merely ‘comfortable’, and passed away with a net worth that was probably under $500,000. They had never invested in anything but their own home.
If not for four very well raised, honorable children, her last years would have been far more challenging.
If they had simply invested, even very conservatively in the second half of their lives, they would have been easily worth a couple million dollars 20 years before they died. Think about that and what difference it would have made.
Now look at your approaching retirement.
If you continue down the current road — what will your retirement destination be?
Are you smiling?
This entry was posted on Monday, October 8th, 2007 at 12:47 am and is filed under Cool Info, Real Estate Investing, Purposeful Planning, Retirement, Cash Flow, Sominex Account, Capital Growth. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.