Back when I was working in a large financial management brokerage (which means I was working with a team of stock brokers), I remembered being shocked at how small people’s portfolios were when they approached retirement.
A very common situation was:
Married couple, sixty years old
Making $100,000+ year combined
$500,000 in RRSP and other stocks, bonds and mutual funds
Retirement at 65
Expecting to continue living their (relatively) expensive ($75,000/yr) lifestyle in retirement
A simple calculation shows that they can live off of their savings for 7 or 8 years, that’s all.
They’ll be BROKE by 75 if they continue to live like they do now. Goodbye snorkelling, hello winter.
Does this sound like where you might be heading ? If you change some numbers in the above story (say, change 60 years old to 50, and change $500,000 in savings to $250,000) does it describe you ?
I’ve found that it describes a large cross section of the people often thought of as ‘upper middle’ class – large income, nice toys, low savings. What happens is that when these people retire, they often turn from golfer to caddie. They have not built up enough assets to live the lifestyle they want to live.
A Financial Future Focus can help alleviate the symptoms of a poor retirement.
If you’re unsatisfied with the traditional strategy of ‘pay off your mortgage, invest in your RRSP, live mortgage-free on a small fixed income in retirement,’ you owe it to yourself and your family to see how investing in real estate can help you build equity and cash flow for an abundant retirement.
I remember talking to a colleague of mine in January, the day before I flew out to spend the weekend with my grandparents in Miami Beach. He told me how lucky my grandparents were to be able to spend the cruel Montreal winters in Miami Beach. Alot of his parent’s friends of the same age were lucky to be able to spend their first three or four winters of retirement in Florida, but after that… the funds dried up, and they spend summer and winter in Kitchener.
It doesn’t have to be like that.
I just started working with new clients. They’re young, just started their family, and are committed to doing the work and developing the disciplines that are neccessary to building their wealth.
They have bought two investment properties in the last month – one at $130,000, one at $122,500 – and have plans to continue building up their portfolio. Thanks to the magic of leverage, they have purchased over $250,000 in assets with less cash than they would have needed to buy a low yielding $50,000 bond.
They also managed to purchase assets where someone else will pay off the bulk of the loan used to buy it.
They also purchased assets that will provide great cash flow and continue to appreciate in value.
Here is how their retirement will look:
Let me know which option works for you.
For all the hard work you do, you deserve a great retirement – and you can have it.
Benjamin Bach is a Sales Representative with Keller Williams Golden Triangle Realty in Kitchener Waterloo. He is passionate about helping people build wealth for an abundant retirement. He educates investors from across North America, helping them develop a Financial Future Focus of where they will take their portfolio.
If you are interested in how you can start your Real Estate Investment portfolio, have any questions about buying or selling a rental, income or investment property in the Waterloo Region, or are looking for a tip on a great book to read, please email Benjamin at (benjamin(AT)benjaminbach.com) or call him at 519 505 1310