How Real Estate Investing Can Save Your Retirement

With the economy's growth slow and life expectancies growing longer each year, the retirement

income crisis is unlikely to be solved with magic or voodoo accounting. Working Americans

need viable solutions to the problem that don’t include the proverbial “working until you die.”

Likewise, moving in with adult children or leaning entirely on state assistance are not attractive

options, either. A quick look at the numbers reveals the breadth and depth of the problem.

Men and women now live to be, on average, 77 years old. That means future retirees need to

plan for roughly 20 years of retirement living, but of course that number may be much higher. In

addition, perfect health is a rarity beyond a certain age. Retirement planning must also take into

consideration the cost of doctor appointments, prescription medications and other health care

services, which continue to rise precipitously in cost. But while life expectancy has steadily

climbed higher, retirees’ savings account, 401ks and IRAs have undergone significant

shrinkage. More than half of American workers now have less than $25,000 put away for

retirement; 33% have nothing saved whatsoever. All of these numbers tell a devastating story—

the coming waves of retirees will face dire circumstances or impossible choices, or both.

In light of these dire predictions, there is a case to be made for investigating some non-

traditional avenues of funding one’s retirement. For example, real estate investment—

specifically rental properties—provides a practical and cost effective means to generate long-

term, reliable revenue throughout one’s golden years. Whereas annuities and retirement

accounts dwindle down to zero as retirees draw on them, rental properties continue producing

steady returns year-in and year-out. In fact, their rate of return actually increases with time.

While rents generally increase over time, the mortgage interest stays the same, and when a

property is owned free and clear, the landlord can pocket most of the rental income. Similarly,

investing in quality materials and performing regular maintenance can also increase the

longevity and profitability of rental units.

For many middle aged and older people, the idea of becoming a landlord can sound

overwhelming. There are numerous hoops to jump through, such as learning the ins and outs of

local ordinances, state and federal tax implications, and the finer points of tenant screening.

Similarly, one has to learn how to compose a legally sound lease agreement. The services of an

accountant and an attorney can both be valuable in the early stages or setting up rental

properties. Rest assured, however, that the Internet and the local library have a wealth of

resources that can help new landlords understand their responsibilities.

Not only does real estate investing provide a dependable income stream, it also offers a sense

of empowerment and activity. Many retirees experience a sense of boredom or lack of purpose

when their 9 to 5 comes to an end. Managing real estate, while not exactly grueling, does

require some basic initiative and attention.

Retirement is fading to a pipe dream for too many Americans. But with some startup capital, real

estate investing offers an often lucrative and fulfilling way out of the retirement income crunch.