The Simplest Retirement Plan
I have two younger brothers. And as their older sister, I cannot help but worry about them and their future. It's my job as the older sister. And lately, I have been worrying about my brother that is closest to me in age.
My brother is very gifted at things that require the use of his hands, a lot of patience, and great attention to detail. He's been a carpenter, a chef, and has also rebuilt cars. He's amazing at all of it. However, he is not so skilled when it comes to managing his finances.
Since he's still young (in his early 30s), he feels there's lots of time to work and make money to put away for his retirement. I wish he didn't think this way. The government may not take care of us when we're older, so the time to start saving for your retirement is now.
I don't want to see my brother in financial trouble later, so I decided to help him with his finances. There was one part of his lifestyle that was glaringly obvious to me that needed to change- he owns three cars. I explained to him if he sold one and put that money into savings, not only would he have the money from the sale, he would be able to save an additional $500 a month.
He can also take on side jobs. People are always asking for help with building fences or kitchen renovations. He doesn't have to work every weekend, and in a year he could have enough saved to put 10% down on a beat up house could be bought for around $200,000.
For a couple of years, he can live there while fixing it up and continuing to save more money. Then, he will turn that house into a rental property, renting it out for about $1,400/month. He then buys and moves into a new property that he will call home.
Fast-forward 25 years - let's see what he has to show for his investment.
Assuming he adds about $25,000 in value by fixing the property up and the property appreciates by 4% each year, in 25 years his investment property will be worth $576,743. And " his tenants will have paid the mortgage off for him! It's almost like someone else was putting nearly $1,900/month into his retirement savings plan for him ($576,000 divided by 25 years divided by 12 months)!
If you're wondering where the 4% comes from, properties increase in value on the average of 4% every year, even with ups and downs in the real estate market. But even if it doesn't increase quite that much, the tenants have still paid off the mortgage over the 25 year time span. The rent from the property that he continues to collect (which would be up to about $2,350/month if rent and expenses increase at a 4% rate as well) will go directly toward his retirement.
In 25 years, he will have his own primary residence paid off as well. If he owned nothing else but these two pieces of property, then he will have about $1 million worth of property for his retirement. Doesn't that seem like a simple way to have other people help you save for your retirement?
So are you wondering what happened to my brother? He followed my plan, sold one of his cars, and now he's doing side jobs and saving up for a nice down payment for his first investment property. - 23310
My brother is very gifted at things that require the use of his hands, a lot of patience, and great attention to detail. He's been a carpenter, a chef, and has also rebuilt cars. He's amazing at all of it. However, he is not so skilled when it comes to managing his finances.
Since he's still young (in his early 30s), he feels there's lots of time to work and make money to put away for his retirement. I wish he didn't think this way. The government may not take care of us when we're older, so the time to start saving for your retirement is now.
I don't want to see my brother in financial trouble later, so I decided to help him with his finances. There was one part of his lifestyle that was glaringly obvious to me that needed to change- he owns three cars. I explained to him if he sold one and put that money into savings, not only would he have the money from the sale, he would be able to save an additional $500 a month.
He can also take on side jobs. People are always asking for help with building fences or kitchen renovations. He doesn't have to work every weekend, and in a year he could have enough saved to put 10% down on a beat up house could be bought for around $200,000.
For a couple of years, he can live there while fixing it up and continuing to save more money. Then, he will turn that house into a rental property, renting it out for about $1,400/month. He then buys and moves into a new property that he will call home.
Fast-forward 25 years - let's see what he has to show for his investment.
Assuming he adds about $25,000 in value by fixing the property up and the property appreciates by 4% each year, in 25 years his investment property will be worth $576,743. And " his tenants will have paid the mortgage off for him! It's almost like someone else was putting nearly $1,900/month into his retirement savings plan for him ($576,000 divided by 25 years divided by 12 months)!
If you're wondering where the 4% comes from, properties increase in value on the average of 4% every year, even with ups and downs in the real estate market. But even if it doesn't increase quite that much, the tenants have still paid off the mortgage over the 25 year time span. The rent from the property that he continues to collect (which would be up to about $2,350/month if rent and expenses increase at a 4% rate as well) will go directly toward his retirement.
In 25 years, he will have his own primary residence paid off as well. If he owned nothing else but these two pieces of property, then he will have about $1 million worth of property for his retirement. Doesn't that seem like a simple way to have other people help you save for your retirement?
So are you wondering what happened to my brother? He followed my plan, sold one of his cars, and now he's doing side jobs and saving up for a nice down payment for his first investment property. - 23310
About the Author:
Learn How to Retire with Real Estate with Julie's free Real Estate Investing Starter Tips Guide. Learn how to create retirement savings, positive cashflow and massive wealth with tips like: How to find quality rental properties, finding and keeping great tenants, and easy ways to make more money with real estate.
posted by Mr. Forex at
12:59 AM
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