113: If You Think a Millionaire’s Retirement is Safe, Think Again
Bob Iger once said, “sometimes I feel like I’m a contestant in a reality show that probably would be called The Apprentice Survivor Millionaire.”
You might think that retiring as a millionaire is the key to a safe and happy retirement, but you would be wrong. In this episode, we’ll show you why the vast majority of millionaires actually retire in poverty. 👀
Today we want to talk about something that a lot of people don’t want to think about – retirement—specifically, millionaire’s retirements.
Many people assume that if they hit the metaphorical jackpot 🎲🎰♠️, they’ll be able to sail into their golden years without a care in the world, but that’s not always the case.
Due to a number of factors such as inflation, the rising cost of health care, and the rising cost of goods in general, even high-net-worth individuals might have to work longer than they wanted.
In a recent 2021 study conducted by CoreData Research, even relatively high net worth individuals are having to face the reality that they might have to work longer than they wanted to, with no set retirement age end goal in sight.
How can that be?
If you think about it, the general rule is to anticipate using about 4% of your assets as income in the first year of retirement, followed by 4% annually plus inflation.
👉 If you do the math, 4% annually of a million dollars is $40,000, which is SO much less than most of us are used to living on annually, and isn’t incredibly realistic for most of us. 😔😔
So what’s the solution here?
Almost everyone at some point has the dream of having a million dollars, or more!
But the truth is that unfortunately, it’s not as luxurious as one might think.
When factoring in inflation, medical needs, and rising costs of living, having just a million dollars won’t be enough for a comfortable retirement, as you saw above.
Even if someone is lucky enough able to save up to $1 million over the course of their working lifetime, that amount will quickly dwindle over a duration of years due to an increase in prices and other factors.
To guarantee a comfortable retirement, one must have more than just a cool million.
Preferably, a lot more… ‼️ 😬😬
When it comes to retirement security, new research has found that millionaires aren’t as prepared as you may expect.
There’s a deceptive security blanket to knowing that you have that big M behind your name.
On the flip side of that, you might be surprised to find out that nearly half of these millionaires are actually worried they won’t be able to retire – and for 35% it will take nothing short of a miracle!
This might seem contradictory, but we can blame it on a fun little thing you might have heard of called analysis paralysis.
We know this might not exactly be the comforting news you were hoping for, but it does illustrate how retirement planning requires serious consideration from all parties involved, and it’s something you should be thinking about and planning for too.
The same study also found that 42% of those surveyed said they were so worried about retirement security, they actively attempted to avoid thinking about it at all – which of course only compounds the problem in the long run.
You can’t run away from retirement, so it’s time to break this trend and make taking care of your future a priority today.
There have been so many things to worry about in recent years, ranging from fear of a recession to rising interest rates to inflationary pressures, 😔😔 so both retirees and savers have had more than enough to worry about.
While the overall rate is still relatively low from a historical perspective, if global economic concerns continue to rise, we could further disrupt retirement strategies already in place by driving up inflation more than expected and raising government debt levels.
But keep in mind that even though the near future may be uncertain, investors (that’s you!) should remember to stay informed on all trends influencing their retirement income security. ✅
With the current economic turbulence and uncertain Social Security prospects, investors face an uphill battle in retirement planning.
Natixis’ Global Asset Management survey further reveals ➡️ that 58% of high-net-worth individuals recognize the tough road ahead, and 31% are bracing for a challenging future without Social Security.
It seems that diversifying investments with a best-in-class risk-adjusted asset-class investing approach (hello 🏢 multifamily apartments) is the way to go if you’re looking for additional streams of passive income that can stave off your retirement. 😔😔
Want to know how to get started? Well, here are three tips to keep in mind before you invest in multifamily apartments.
#1 – The Rule of 50%
While the value of a piece of real estate will always be dependent on a variety of factors, the 50% rule can provide an effective starting point in assessing multifamily properties.
Stripping away the complexities of supply and demand economics, the 50% rule is direct and simple to use – all you need to do is estimate your needs as a percentage of your annual income. ☝️
These are things like rent payments, washer and dryer fees, parking fees, insurance, etc.
If you budget accordingly,you will have a good baseline for developing a more sophisticated strategy.
This approach provides just enough structure to help beginner investors evaluate potential deals without getting bogged down in extensive market research. As with any investment strategy, it’s important to acknowledge the drawbacks but also recognize how beneficial the 50% rule could be when used properly. 🙌
#2 – Know Thy Cash Flow
Cash flow is the lifeblood of any successful venture, and when it comes to investing in multifamily apartments, securing a consistent stream of cash is essential.
Investing in any real estate asset without substantial positive cash flow means you’re speculating on its appreciation, which can put your financial future at risk.
And we don’t want that! 😣😣
One smart way to do this is by figuring out the difference between the property’s Net Operating Income (NOI) and your estimated mortgage payments.
By making this calculation 🧮, you’ll be able to determine if investing in this particular property will be worth it—it could mean money straight into your pocket.
If you have any doubts, going through these numbers can be a great way to give yourself even more assurance that you are making the right decision. ✨
#3 – Figure out Your Exit Plan
After investing in a multi-family property, it’s natural to think ahead to the exit plan.
As much as we all wish real estate investment was an indefinite game, reality dictates that most multifamily apartments are only held on to for 3-5 years before they hit the market again.
👉 So while cash flow during the holding is a major benefit of owning this type of investment, you also want to make sure that your property.
This is why knowing these 3 tips is crucial in determining if the investment will be worth it! 😍😍
If you’re looking for additional streams of passive income and a comfortable retirement you’ve got to invest in a best-in-class risk-adjusted asset class investing approach (hello again, it’s multifamily apartments)!
The Big Picture
Knowing these 3 tips is crucial in determining if the investing will be worth it!
If you’re looking for additional streams of passive income and a comfortable retirement you’ve got to invest in a best-in-class risk-adjusted asset class investing approach (hello again, it’s 🏢 multifamily apartments).
To get started, all you got to do is join the Kitti Freedom Club for insider tips specifically designed for our most favorite peeps (hint: that’s ❤️ YOU!).
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