Is Real Estate the New 401(k) for Retirees?
Writen by Russ Whitney
Hitting the traditional retirement age of 65 does not necessarily mean you are ready to retireat least, not financially. Social Security benefits alone are simply not enough for most people to live on, corporate pensions are rapidly disappearing, and even people who have done some retirement planning are finding it necessary to continue working well into their late 60s and even 70s. Two thirds of baby boomers polled in a recent survey said the cost of living is too high today to truly retire and never work again. And it seems they are right: According to the U. S. Department of Labor, nearly 1 million people age 75 and older are working at least part time.
Savvy boomers are growing their nest eggs before and after retirement by investing in real estate. In fact, by providing people with a relatively safe way to invest and generate cash flow well into their golden years, real estate functioned essentially as a retirement plan before such plans became part of the U.S. tax code. Of course, actual plans such as 401(k)s allow you to defer taxes, but real estate investing also provides you with a number of tax saving strategies. My point is this: If you want a comfortable retirement, real estate can help you get it.
Let’s return for a moment to the 401(k) model. If you happen to work for a company that offers this type of retirement savings plan (and not everyone does), you’ll make your contributions (which may or may not be matched by your employer) and have some limited options as to how the money will be invested. In general, you canbut don’t have tostart withdrawing funds at age 59