Death of The Nest Egg
I recently did a survey (non-scientific) of over 500 people about retirement and savings. 94% of the people that answered thought they needed more than $500k to retire comfortably.
You will need more than 500K folks—much more. You will need buckets of money. In fact, I suggest you at least shoot for cratefuls of money. Did you know there is enough currency on this planet floating around for each person to have a billion dollars? The least you could do is go for $100 million.
Forget about 500K, that will be poverty. $1 million isn’t even near enough—unless you want to live on $50,000 a year after taxes and Social Security? That’s not counting inflation. If $50K is your future budget you can forget about playing golf every day or traveling the world.
The fact is most people are underestimating the amount of money they need to accumulate to have a comfortable retirement. I’m not talking about savings accounts—which is basically mattress stuffing. Savings accounts will lose you money because interest rates don’t keep up with the pace of inflation anymore.
The key to retiring is earning and investing. If you make 50K a year, it’s going to be nearly impossible to save enough to retire. A penny here and a penny there will end up several pennies somewhere. The plan of buying a house, living in it for 25 years and paying it off to create wealth is a 1960’s way of thinking—that nest egg plan is dead. You need to plan on living until you are 90 and having to take care of your parents as well.
You don’t want to be dependent on the government and its social security program that may or may not be functional in the future.There are better options to building your nest egg than a market tied to a 401K. The only reason to save money is to invest it. Save to invest, don’t save to save. I typically invest in real estate to give me stable cash flow.
I do this for several reasons:
#1 Dependable Income Stream
One of the biggest benefits to income producing Real Estate Investments is that the assets are generally secured by nine- to fourteen-month leases which provide a regular and dependable income stream that should produce positive cash flow.
#2 Inflation Hedge
As countries around the world continue to print money to spur economic growth, it is important to recognize the benefits of owning income producing real estate as a hedge against inflation. Generally speaking, when inflation occurs, the price of real estate, particularly multi-tenant assets will also rise.
#3 Physical Asset
Income producing real estate is one of the few investment classes that as a hard asset that has meaningful value. The property’s land has value, as does the structure itself and the income it produces has value to future investors. Income producing real estate investments do not have red and green days as does the stock market.
These are just a few of the reasons why I do what I do. Remember, you can’t invest in real estate if you aren’t producing enough income to even save. If you want to retire the right way you need to find a way to increase your income. If you want to retire with more than 500K to your name, On Saturday I delivered a webinar codifying the routes on How YOU Can Become a Millionaire.