If 50 years of working is too long to wait for retirement....then here is an alternative way to retirement...
Ahh....the dream of not working, answering to a boss, enjoying the treasures that life has to offer. It sounds like a dream, however behind those postcards of heaven on a beach sipping margaritas is the dark truth.....most people will never get the chance to retire. Worse yet is those who can retire won't be able to do most of the wish list items due to lack of financial cabability. What goes wrong? I offer a humble opinion to this delemia and a possible solution for those who are searching for a different path to take.
First let's take a quick look at the "standard" way most of the working class gets to retirement. We are all taught at an early age to get stelar education so we can get a high paying job. We are also taught to put as much in 401Ks, IRAs, and retirement accounts as possible for our dream retirement. If...and that is a very big IF..... a person is lucky enough to be with a company that doesn't go under ( enron, worldcom, too many others to name in this forum ). After our lifetime of working, we start to receive our retirement distributions......which vary greatly depending on the investment performance of your portfolio manager or individual equity and or debt returns. From a large pool and time of savings, sometimes more than 40 years, the average person can retire and live within a standard means. Well what if you want more...or better yet don't want to wait 40 years or more, what is an option?
Answer for consideration is Real Estate aquired properly for cashflow.
There are always opportunities in every assest class to increase your net worth, however no assest class offers as much use leverage as real estate to posistion yourself in cashflow properties. This single factor is why anyone looking to a quicker retirement outlet should explore the use of real estate as a tool to that means.
Example;
Let's keep the math simple to illustrate a point. Feel free to multiply the results to match your personal retirment objectives.
Goal is to have $2000 per month in spendable cash for retirement.
Option #1 is to go the normal route and receive distributions from retirement accounts. Assuming a 5% rate of return, you will need a minimun of $480,000 in savings to get this. WOW!! Please note this equation does not take into account replacements for inflation, tax payments, risk of continual returns, or management fees. If we took all that into account, the base amount would be even higher. Also noted is that principal is not being drawn upon. Question to think about for a moment......How long will it take to save a half a million dollars?
Option #2 is to take an alternative route and receive cashflow from properly aquired income producing properties. Assuming a $500 per month positive cashflow after all expeses, reserve for replacements, management fees, tax reserves, etc., it would take the purchase of 4 properties to aquire the goal of $2000 per month spendable cash. We all know that most real estate transactions use some form of leverage and thus we need to have a fraction of the aquisition cost to build our cashflow portfolio. WOW!!
So in conclusion which is right for you? I feel pretty confident that the average person can aquire 4 properties producing $500 per month cashflow quicker and easier than saving a half a million dollars from earned income. How long do you think it would take you to aquire 4 income producing properties with the assistance of your professional team? If you said 50 years...get a new team.
Please note, the results do take into account assumtions, various degrees of risk, time, and multiple issues unique to each transaction. ALWAYS consult the advice of your team of professionals to decide what is best for you.
Have a great day