Life as a REALTOR® is exciting and fast-paced which can make it exhausting. After a long day with clients, it’s easy to start daydreaming about a relaxing retirement, but to make the most out of it, it’s important to start planning early. While there is no one-size-fits-all approach to retirement, we do have a few tips that may help you reach your goals.
1. Invest in rental properties
NAR's Member Profile reports that 30% of REALTORS® own investment property. This is quite a low number considering REALTORS® have the knowledge and connections to make managing rental properties relatively easy. Not only is real estate an appreciating asset but, as a property owner, you have the ability to increase rent as the cost of living increases, which generates great passive income. A financial advisor who specializes in real estate clients has found that REALTORS® with two or three investment properties have the easiest retirement planning.
2. Save, save, save
When saving for retirement, there’s no way to get around, well, saving! Experts recommend putting away 10% of your income for retirement. It’s important to figure out the saving and investment strategy that works best for you, especially because most REALTORS® don’t have an employer-based 401(k) or pension. There are other options, such as Roth IRAs and SEP IRAs, that may work well for storing your savings. Seek advice and guidance from professionals, but don’t wait to start saving. Even setting part of your income away in a bank account is a good place to start.
3. Make wise decisions
When it comes to saving for retirement, it’s important to think carefully about the decisions you make. For example, even if it comes from a good place in your heart, paying for children's college from your retirement fund is often not a great idea. The truth is, kids would likely rather pay off a student loan than support you in your old age. Additionally, don’t buy a collection of rental properties if you’ve never managed them before. Buy one, try it out and see if you like being a landlord, then make decisions from there. Don’t make impulsive, short-term decisions when dealing with long-term savings.
What has been your experience with saving for retirement? Share in the comments below, or join the discussion
on Common Ground.