Each and every one of us wants a good retirement. Better than good! We want to be able to have more than enough to live out our golden years doing what we want to do, seeing what we want to see, and leaving a legacy for the next generation.
However, before we can even think about legacy building and how real estate investing can play a role, we have to plan for a retirement that fits our needs. A retirement that we have envisioned, prepared for and brought made a reality!
Saving for retirement, however, isn’t like it used to be. Just a few decades ago, you could work for the same company for 40 years, retire, and live on your savings and a pension and not really worry about it. Not so anymore!
Work culture has changed, and so have our retirement plans, our expenses, and our life expectancies. Planning for retirement takes a more active hand. So if you really want to lock down your financial future...
, you’ve got to step up now—as early as possible—and really think about your money management strategies.
Committing to a solid financial future is no walk in the park. Committing to a slow and steady investment meant to be a cornerstone of your retirement will be even tougher!
5 Foolproof Financial Strategies for a Solid Retirement
Commit to Saving
Let’s get the obvious one out of the way. Saving money is foundational and fundamental to your retirement savings. It’s not, however, good enough on its on. You can’t rely on your savings to get you through. Savings are the launching pad that gets you further! Think of it as the absolute baseline first step.
No matter how much you make or what your expenses are or how old you are, do your very best to save something with every paycheck. Those savings are going to enable you to build up your financial future. They empower you!
Create Streams of Passive Income
As we said, you can’t rely on savings alone. Just as money sitting in a checking account does nothing for you, even your savings—despite that little bit of interest it might be earning you—isn’t going to cut it. It’s time to make your money work. In your retirement, you still need to be earning money. It’s just not money you should have to work for.
Passive streams of income are the keys to a happy retirement. For you, that can look like a lot of different things. Naturally, we’re going to say it looks a lot like investing in real estate. Real estate investment is self-directed, scalable, resilient to market fluctuations, and has risk that you can manage. You can be as involved or passive as you want to be.
You can start with a few properties and grow your investments to dozens, to a hundred, and have so many streams of income that you’ll never have to worry about money again.
Diversify Your Portfolio
Portfolio diversity is the key to managing your risk—even in real estate investment. Even if you’re only investing in one type of thing (real estate), you can have diversity. Diversity of market, diversity of type of property, neighborhood, number of properties, etc., all help you manage your risk. If one property is vacant, you still have other streams of income compensating.
Diversity simply helps ensure that you aren’t left without income if there’s a lull, snag, or disaster that prevents an investment from generating revenue. That’s why it’s important to scale. In real estate investment, there’s value in looking to different markets in case economic conditions cause property values to drop or rental demand to decrease. You can still have other rentals in markets that are healthy and strong.
Reduce Your Tax Liability
Beyond your streams of income, one of the best ways to save for retirement is to manage your tax liability. For example, when you rely on a 401(k), one of the points they’ll try to sell you on is your capacity to save pre-tax. Unfortunately, they don’t tell you that when you take out that 401(k), you’ll be taxed on the personal income level. Ouch.
A better option would be to put your money in a self-directed IRA, which is usually tax-free. You also have control as to where that money is invested, with some guidelines.
Direct Your Own Future
Regardless of your strategies for saving for retirement, one of the best things you can do for yourself is to take charge of your own financial future. What does that look like? One, it means you don’t take everything at face value. Example, as we discussed above, would be not blindly trusting company retirement plans and 401(k)s.
It means you define your retirement goals and make active plans to achieve them. Even if you decide to achieve them through passive means, you select those means on your own terms. You seek the right counsel and educate yourself so that you can make well-informed decisions.
Because ultimately, it’s the rest of your life: and that’s important.