Retirement Is ALL About Reliable Income – The Rest Is Happy Talk
Though many real estate investors are primarily interested in short term profit, almost all of ‘em eventually turn their efforts towards ensuring a sizable and reliable retirement income. Yeah, classic Captain Obvious material to be sure. Still, experience consistently demonstrates how, more often than not, people get their eyes off the ball — and make no mistake about it — abundant high quality, steadily reliable retirement income is the ball. Net worth is fun yackin’ about at your buddy’s BBQ, but it won’t be of primary importance to you in retirement. Income will be. Does anyone doubt or dispute that?I recently asked a caller whether or not they’d prefer a safe and reliable retirement income of $100,000 yearly, or twice the net worth with half the income. She thought I was playin’ with her, which of course, I was. Yet how many times have we read or heard somebody talking about net worth while not connecting it with income? There are folks I know personally who’re making or will make $10-30,000 a month in retirement. Yet many of ‘em don’t have the net worth of those now learning to live on WAY less than that cuz they chose, shall we say, a relatively inferior income strategy.For exampleImagine you walked away from your job last week, ready to sail into the sunset. You have a couple million — the nest egg you’ve built over lo these many years. Being exceptionally conservative while following Grandpa’s example, you’re invested in various bonds and treasuries. The 10 year government treasury closed this Monday night at roughly a 1.51% yield. Let’s do the math, alright? 1.51% X $2 million = $30,200 a year — wait for it — before tax. Oh happy day! But, you say, “I can do twice that in the bond market.” Go ahead. Would love to hear how the spin goes when you’re asked how your two mil is producin’ for ya. A bit over $60,000? Really? Before taxes? Hope your buddies have great poker faces.If all that was done was paying cash for some super located rentals in an equally superb market, they’d screw up and make $110-135,000. Oh, and around 30-45% of that would be tax sheltered, maybe ’til they’re long gone. Put another way, and in plain ol’ regular folk English, the after tax income from just payin’ cash for high quality residential income properties would more than double that of the bond approach — literally.It’s about income. It’s always about income.