A little recap from Part 1, I talked about coming across a Forbes article, Titled, “Solving the longevity wealth crisis” by Robert Johnson. I just want to highlight some of the points in the article that resonated with me and Property Boss’s some ideas of how they can solve this crisis.
Most are ill prepared, and I suggested you take a look at a retirement calculator so you can see for yourself if you will be ready. I came up with my future expenses of $80,000 a year, that includes housing, vacations, visiting grandchildren, cars, clothes, college funds, etc. I was short in my savings per month. I was woefully short monetarily to live this lifestyle I say I want.
The www.Smartasset.com calculator tool calculated the money I’m on track to have based upon my inputs and it says I’m on track to have only $974,831.
Based on my current situation scenario, and my numbers I punched in, when I am 66 years old, I’ll have $974,831 in retirement savings. That is good, however, it is not going to meet my $80,000 annual expenses target. I will not be working so I need my money to work for me so I can have the “time of my life” when I am in retirement or even starting sooner than expected. I plan on being foot loose and fancy free, travel when I want. Visit grandchildren when I want. Drive the car I want. Have a personal chef. What about you? How do you want to live when you reach retirement? I want don’t want to depend on my children for my assistive care, I want to age in place and have a care giver. What do you want as you age?
However, in order to achieve this lifestyle, the reports states, I need to start saving over $3,000 a month, almost $4,000. It was $3,945 more specifically. That is why there’s a deficit of $583,959 but, there’s hope. This crisis is also why, I created Miss Property Boss. I want to teach people who are, who are fed up really with their current financial picture and want to create their own economy and live a life on their own terms. Are you like most who realize there is a disconnect between your finances and the lifestyle you want to live? Your trying to get to a “magic” number and what you’re doing is not a diversified approach. You have, like me, a corporate job, maybe some money saved, but it still may come up short. You should consider thinking outside the box. There are several avenues you can take to hit your “magic” number. I call it the “Happy Retirement Number,” HRN for short.
Let’s move on and let’s see how this extra needed 3 to 4 thousand dollars income a month is doable. Shall we? Just for the sake of using round numbers, I want to round up to $4,000 a month. The power of real estate. You can use real estate to fund your own retirement plan. You can use real estate to build your own economy. Investing in real estate isn’t a very high barrier of entry, but you just have to get yourself on the right track in order for you to enter. Continuing with my example of, I’m at a $4,000 a month shortfall, here is how I can use real estate to my advantage. If you purchase a piece of property this year, a bread and butter house, a three bedroom, two bath house, with a few caveats. We’re looking for houses that are the right house. We’re looking for houses in the right neighborhood. We’re looking for people that are the right tenants. We are focused not willy-nilly and hoping for the best. We are strategic. A Property Boss Builds Ownership Success with Skills and Strategies. I digress, back to our example. You purchased the right house. It brings in a monthly rent of a thousand dollars, which is very easy to do in the right neighborhood. I own one now. Your expenses for upkeep and maintenance is $500. Let’s recap, you have income of $1,000 and then we say your expenses are $500. Your net income would be the $1,000 minus the $500, so total of $500. What can you do with this $500? You can reinvest it, you can pay down your mortgage, or you can beef up your rainy day fund. Just don’t spend it frivolously. A Property Boss has a plan of action and then executes the plan. We don’t just stop there; we can continue building ourselves out of this crisis. You can build yourself out of your crisis. From the date of purchase in 2020 and 15 years from now, each month you’re accumulating $500 net income while your mortgage is steadily going down. In 15 years from now your mortgage is paid off, your expenses decrease and your income increases.
An extra bonus is, you can over the same 15 year span, increase the rent. You want to be competitive with the market rent rates and you want to make sure you have happy tenants because the longer the tenant stays the better off you’ll be. You can increase the rent 3% each year. So 15 years later you’re now receiving income of $1,557.95. Let’s round this up to maybe $1,558 rental income. I previously said your expenses should go down that’s because you have paid off your mortgage. That’s what Property Boss’s do. Now the only thing you have really is property management, maintenance, and taxes at this point. So, if you look at what this one rental house can bring you against your “Happy Retirement Number,” you closed the gap with a $1500 income. Well, if we know that one property has gotten you close to $1,500 a month, then only thing you need really is two to three more properties.
What if you don’t raise the rent by very much, and you just let it ride below the 3% yearly increase. Three properties with the rent still coming out ahead of the expenses from the 15 year mark, $1,200 a month of net income will yield you $3,600 a month. That’s awful close to your HRN, filling the gap of your $4,000 shortfall. It will fill the gap of my shortfall. I’ll take it! Wouldn’t you?
To close, I just wanted to again, make sure you are aware of this eminent wealth crisis, this longevity crisis that people are living longer. You know, most people don’t have really enough to sustain their life as they enter into retirement. Have you considered whether or not you can sustain your life when you reach retirement, or even sooner? We can’t depend on the government either. We can’t depend on our corporate jobs. We need to diversify because if not, we are going to be in big trouble when it comes to our retirement years and then we can’t survive. Even if it is before retirement, how are you going to pay for college or your vacation without taking out dreaded loans? Can you imagine the number of people that will try to survive in retirement and put a squeeze on social services and the government? I really don’t think it’s going to be sustainable and it’s going to be a huge collapse.
I want to leave you with a quote by, Madam CJ Walker, she said she had to make her own living. She had to make her own opportunity, but she made it. She says, don’t sit down and wait for the opportunities to come. We have to get up and make them.