What Will You Do about Money If You Live to Be 100?
Experts think that any of us living today, who reaches age 65, healthy and vibrant, will easily make it to age 100. Whoa! That will change things financially, to say the least. In the “old days,” between 1960 and 1980, people who reached retirement age lived just four to eight years past retirement to about 69 for men, and 72 for women. It wasn’t too big of a stretch to have between five and 10 years of retirement income saved . But consider working 35 years, then retiring for 35 years instead of just 5 to 10. I read an article in 1983 that said by the year 2000, many people would be retired as long as they worked. At the time I balked at that idea — NO WAY! I thought. But the fact is, those numbers are a reality now and that longer retirement period is presenting some very challenging problems we all need to think about:
- How will you afford to live 35 years into retirement?
- Will you need to work more years than you had originally planned, until age 75, for instance? What if you can’t because of poor health?
- Will you have to reduce your living costs drastically to make ends meet?
- What about inflation? If the inflation rate keeps averaging 5 percent
per year as it has been doing, living on a fixed income for 35 years is not going to work very well. - People may be living longer, but especially in the United States, where the standard American diet is so poor, you won’t be living to
a ripe old age in good health. What if you’re one in four people who will require long-term care? This is expensive at between $2,500 and $6,000 per month. - Social Security will be bankrupt in 2034, according to the Social Security Administration’s annual report, so what do you do if you can’t count on even that income in retirement?
- If you are one of the many retired persons who is divorced, what will you do to live on just one retirement income instead of two?
The old way of looking at retirement planning may not work for you anymore. Trying to save using a basic 401(k) is passe. It’s time to get creative and look at real estate, life insurance, annuities, and leasable resources as other options for creating a predictable retirement you can’t outlive. I suggest you read the book MONEY, What Financial Experts Will Never Tell You. Full of case stories and practical, holistic approaches to financial planning and retirement that are easy to apply, this book is a 
must-read. Get it in time for Christmas and give it to your kids as well. They will for sure be living longer than you, in most cases, and will have to be ready for a long retirement period. Why not prepare them for that now? Get going, as time will keep marching forward. Will you be pleasantly surprised when you reach retirement age, or will you be horrified and shocked at what you have done to yourself financially by not taking things seriously today?
course, for most people it is also cost prohibitive. Most professional investors have built up a large enough cash reserve where they can afford to buy using “all cash” should they so choose. An important question to ask is:
Also called a “No Money Down” mortgage, this type of loan can be problematic. If you borrow money and claim the debt on your loan application for the new property, it may cause the application to fail. And if the money you borrow is through a credit card, for example, it’s going to cost big in terms of interest expense. When the payment on the down payment loan is added to the payment on the traditional mortgage usually the amount will become so large that it can’t be covered by the operations of the property and can often lead to foreclosure. 
Sometimes it is just more profitable for you to join forces with a partner or two to get the down payment, thereby avoiding higher payments. This is not a method for acquiring real estate that I can really endorse.
make sure legal documents are in order.
estate business to help track each property’s return on investment. In addition, remember to document and deduct all your real estate research and finding activities to take advantage of the most tax savings. This will include:
Start by devoting the right amount of time. Take the time to research a property and take a hard look at the numbers to make sure it’s a good deal. This is way more important than trusting your gut instincts on what you think its potential might be. Take the time to independently verify acreage, average utility costs, how well the property stays rented, etc. In addition, you will need to look at more than just two or three properties to find a lucrative deal that will provide an adequate return on investment. The following “Property Research Formula” provides a good guideline for ensuring that you are researching enough properties to be successful:
cash flow numbers and more likely to deal well emotionally and psychologically with what those numbers tell you. With a clear cut number in mind you can move on more easily should you find the property cannot produce an adequate return. This empowers you to move quickly from one prospect to the next until you find what you’re looking for. If you’re in love with the way the place “looks” and “feels” but can’t fall in love with its return on investment, it’s time to “break up” and move on to more promising prospects. A good match isn’t just a pretty face, but the ability to “provide” for you as well.
res liquid funds to that when a good deal presents itself, you will be ready to put up your own money (or a combination of your money and other investors’ funds) for the required down payment on a rental property. Liquid cash is also needed for a minimum investment amount for a REIT or Tenants in Common deal that may present itself. This is surplus you can invest without jeopardizing yourself or family.
course, the best property will show the ability to generate cash flow itself in order to cover payments, but you should also be able to personally demonstrate that you can cover the payments. A banker who sees your Spending Plan in balance with a 20 percent personal savings rate, for example, and a property that can show a return on investment is going to have confidence in you that you have the capacity to pay for the property.
is responsible for paying the mortgage, taxes, and costs of maintaining the property. Ideally, the landlord charges enough rent to cover all of the aforementioned costs. Drawbacks include bad tenants who damage the property or not being able to get tenants at all. Managing the property and collecting rent are other considerations in private ownership. When the furnace stops working in the middle of the night, the landlord gets the phone call.
f the equity when the property is sold, but has no rights of survivorship.
