We all want to enjoy retirement. In this day and age, achieving financial security in our golden years is more challenging than ever. Statistics paint a picture of retirement realities. American workers have saved a median $97,000 for retirement. Compare that to the standard goal for a “comfortable” retirement, $1.4 million.
For many, that’s unattainable. It’s no wonder 55% of Americans intend to work after they retire! Here’s the good news: your dream retirement doesn’t rely solely on your ability to save. Investing in real estate is one of the best ways to build wealth and secure the retirement you’ve been dreaming of.
How Will Real Estate Investments Prepare You for Retirement?
1. You'll keep earning post-retirement income
Don’t underestimate the power of passive income. For most people, retirement means relying on savings, an IRA, 401k, or another finite account. Your life becomes budgeted without the level of cash you were used to. Living longer than expected or encountering unanticipated expenses can dramatically impact the quality of life you can afford.
Securing cash flow with a diverse real estate portfolio solves this problem. The more streams of cash flow you have, the better!
2. They're your defense against inflation
Not all investments are immune to inflation. In fact, many are vulnerable! Inflation happens naturally and decreases the worth of the dollar. Here’s a simple example. Between 2010 and 2023, the total rate of inflation was 38%. You had $100,000 in 2010. You didn’t touch it. In 2023, you would need nearly $38,000 more to hold the same buying power.
Even when investment accounts and savings grow, they rarely keep up with the inflation rate. Real estate is the exception. The value of real estate (and rental rates) grows with inflation. By holding real estate, you preserve wealth regardless of the economic climate.
3. Property investments will appreciate
Apart from inflation, real estate tends to gain value over time with extreme consistency. Other assets may fluctuate back and forth. It’s somewhat rare, though, for the value of a property to drop below what you paid for it (assuming due diligence was done!). Should that value drop, historical trends dictate that it will bounce back.
For the retiree, there are assurances in real estate investment that you won’t get from other asset classes.
4. You can continue building wealth for your entire family
The benefits of investing in real estate will outlast your life. Through wise estate planning, you can bestow income-generating investment properties on your heirs once you’re gone. A few exceptions exist, but real estate is inherited on a “stepped-up” basis. This means the IRS resets the base value of the inherited property, so heirs are not subject to immediate capital gains taxes.
Say you bought a property for $100,000. It was worth $250,000 at the time of your death. The IRS would reset its base value at $250,000 for your heir. You don’t pay capital gains (you’re dead), and neither do your heirs!
5. It's stable and reliable when you need stability and reliability!
Real estate is a time-tested investment. We know what works and what to expect. Because real estate is also a physical asset, it will always carry inherent value. Even if the property is destroyed, the land will hold value. There’s so much peace of mind in that fact! Avoid unpredictable, trendy investments like cryptocurrency if you’re investing for retirement. These assets may have windows of flourishing, but the tide can turn on a dime. People have lost hundreds of thousands of dollars, if not more when unreliable assets crash.
6. Success doesn’t depend solely on your ability or involvement
Most retirees don’t want to take on a demanding job. One of the most significant advantages to single-family rental investing – particularly turnkey investing – is that you aren’t required to do the hard work. Owners have responsibilities but don’t have to oversee day-to-day operations or perform demanding tasks. Your success isn’t determined by your physical ability, time availability, or personal expertise.
Thankfully, owners leverage experience through turnkey partners. Not only does this mean avoiding common mistakes, but it means being best equipped to build lasting wealth.
Did you know that many of our investors utilize their SDIRA's to invest, maximizing their retirement portfolio?