Retirement Salvage

[smurphny]

The old adage about buying land: "They ain't makin' any more of it," holds a lot of truth. I would think that the likelihood of land prices going much lower than they are now are slim. There is no r.e. recovery on the horizon but I think we're bumping along close to the bottom. If I had a large chunk of money right now, it would either remain in cash or in land at depressed levels but I would NOT be leveraging any r.e. nor would I get into the risks of renting, although it is tempting for the income. Lorenzo's advice above about paying a pro who knows about trust investments is good. The only problem is finding someone you trust who knows what he/she is doing. Asking wealthy friends who they use is the way to go. A caveat on land investing (which I'm sure you know) is that you really have to know the local market (that "location..."thing), the history of the piece (buried tanks, etc., and the relative value. Land can remain a 0 investment for many years. Probably the best bet would be to buy a lot or two in a known subdivision there in FL that has been really pummeled in price. Then be prepared to wait. The current capital gains structure is very likely to change as well which is something I am very worried about, having seen the results during the 70s/80s.

[Ti' Punch]

capngeo,

I think you are right to worry about the solvency of the state. Just think about it for a minute. The Boomer generation is retiring. There will be fewer workers supporting a greater number of retirees than ever. On top of that, thanks to improvements in health and medicine, the retirees will be living longer than ever. By your own estimate, you may potentially live more of your life in retirement than you did in working years. You are probably not an isolated case. There is no way the State/Federal governments are going to be able to keep all the promises they have made. What cannot happen, won't. There will be a default of some kind. That would eliminate option #1 in my mind.

If real estate is what you are comfortable with, I would follow the advice you have received so far and get a good lawyer that can walk you through setting up your own retirement trust so you can take option #3 without the big upfront tax hit. It will be a little more work than just getting a check every month, but to me, relying on option #1 would be crazy.

[lorenzo b]

Jeeze, was it yesterday the Dow cracked 26.6?
It's about 3 pts from 12.7 today.
Better sell quick, who knows where it will be tomorrow.
We may all have to pay taxes.

[capngeo]

Thanks for the replies. So far, almost every "advisor" turned out to be a salesman, and the ones that weren't were all steering me to traditional (stocks) investments... I guess I need to keep looking.

The RE I have made money off of has all been rental property. As long as the rental income vs. cost numbers make sense, it's hard to go wrong. I don't worry about maintenance, as there is NOTHING on a house I can't fix. Insurance is not too bad as I usually carry a high deductible ($10K). Taxes, well they are what they are. The key to successful rental is selecting the right tenant; I'll let a unit sit idle for 6 months before I rent to someone who I don't feel is right. Gains in property value is only a bonus.

My average income has been in the 10% area on investment... BUT with a mortgage, the interest is deducted... even so, I've been seeing a 3-5% "profit". I'd like to be my own "bank" and keep the whole 10% for me. I'll look into the trust, thanks!

[muskoka]

As long as your retirement funds are essentially a promise from another entity (corporation or government) you run the risk of that promise being revisited. Annuities from a reputable company excepted, probably.

The best strategy would be to speak with a lawyer & accountant & (paid) financial advisor and try to "ring fence" your pension. I've no idea what that would entail but a few thousand bucks on professional advice might be well invested. Spend a lot of time vetting who you talk to.

I don't have a "pension" - I've run my own business and have had to plan for no old age subsidies beyond a government stipend which I plan to spend on a bottle or two of rather nice Chianti. The rest of my lifestyle is well funded by a few decades of hard graft.

I think it's a travesty that pension promises seem to be so easily repudiated. Thankfully the Chairman got his golden parachute though (he did work ever so hard after driving his first corporation into the ground)....

[lorenzo b]

It works very well when you can do all your own maintenance and manage the property, but that hardly sounds like retirement to me.

If you buy an old fishing boat, you'll really find out what work is.

I would still look into placing all you wealth in a retirement trust fund, just for the protection. Assets have a nasty way of being targeted by lawsuits. Top off your insurance with a huge umbrella, it's not that much more.

[capngeo]

Originally Posted by lorenzo b

It works very well when you can do all your own maintenance and manage the property, but that hardly sounds like retirement to me.

If you buy an old fishing boat, you'll really find out what work is.

I would still look into placing all you wealth in a retirement trust fund, just for the protection. Assets have a nasty way of being targeted by lawsuits. Top off your insurance with a huge umbrella, it's not that much more.

hehe, call me daft, but I actually enjoy fixing up old houses. It is kind of the Yang to my career as a firefighter; we tear the heck out of a house when fighting fire!

BTDT with old boats BTW!

[muskoka]

Originally Posted by capngeo

hehe, call me daft, but I actually enjoy fixing up old houses. It is kind of the Yang to my career as a firefighter; we tear the heck out of a house when fighting fire!

BTDT with old boats BTW!

Hell! Do what Wall Street does: Insure the hell out of them and stand back with a cigar & whisky whilst they burn, baby burn.

[cchesley]

I retired at 52 with a lump sum payout which I rolled over into a 401k for my 'new' business which hasn't made (nor lost) a penny. That lump sum has now more than doubled in just 5 years so despite not getting a great lump sum (due to early retirement) I'm probably at the same place I'd be if I retired today and took a lump sum or even better off.

I share the belief that having someone else make the promises and hold the money is risky in today's environment. Despite my belief that real estate still has a ways to fall in many areas, if you can get a positive cash flow without borrowing money, then the purchase price becomes irrelevent. Not only that, but should inflation really roar, then your rental income will roar as well. That's probably the best way to stay on top of inflation.

$0.02

[hpeer]

Originally Posted by cchesley

I share the belief that having someone else make the promises and hold the money is risky in today's environment. Despite my belief that real estate still has a ways to fall in many areas, if you can get a positive cash flow without borrowing money, then the purchase price becomes irrelevent. Not only that, but should inflation really roar, then your rental income will roar as well. That's probably the best way to stay on top of inflation.

$0.02

There is a lot to this post. Good for you for retiring at 52. The rental property thing can be a bit tricky. We have a property that is doing well for us, but we bought it about 17 years ago. About 12 years ago I looked into buying a second and the prices had gone up so much it no longer made sense. So this might be a strategy for someone earlier in life looking forward to a retirement rather than someone at retirement looking for an income.

I do agree with your point on inflation and rents. I hope!

The other problem with real estate is it comes in big bulky packages. It's hard to sell a wee bit in order to buy a lunch.

I do however share the pessimistic view about today's economy and our financial status. I just don't have a good counter solution.

[boatman61]

After listening to you guys.... I'm so happy I'm broke...
No Ulcers... no Stress... no Worries...

[kenny chaos]

Originally Posted by boatman61

After listening to you guys.... I'm so happy I'm broke...
No Ulcers... no Stress... no Worries...

Yep. It's all about attitude, or, the attitude of gratitude.
Sorely and sadly missing in those that have.
You smart man boaty.
Kenny

[Doodles]

Originally Posted by kenny chaos

Yep. It's all about attitude, or, the attitude of gratitude.
Sorely and sadly missing in those that have.
You smart man boaty.
Kenny

O.K., just give me all your money and you can be as happy and carefree as boatman.

[boatman61]

Originally Posted by Doodles

O.K., just give me all your money and you can be as happy and carefree as boatman.

3mths to late mate.... he's spent it all on a really sweet boat..... lmao
Which reminds me....
Kenny... have you collected it yet or is it still iced up...

[kenny chaos]

Originally Posted by boatman61

3mths to late mate.... he's spent it all on a really sweet boat..... lmao
Which reminds me....
Kenny... have you collected it yet or is it still iced up...

I'm sorry. I can't afford to answer that.