Your Retirement — 19th Century — Back To The Future

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I haven’t done a buncha research on this, but in talkin’ with the really old farts in my family, a couple of whom were born in the 1920’s, I’ve learned some interesting/alarming little factoids about retirement back then. For 99%, retirement appeared to be the ultimate Do-It-Yourself project — sink or swim — but in reality it hardly ever turned out that way. Even when subtracting the wealthy and the good-for-nothings from the equation, it’s my guess that well over 80% of our population back then were unsuccessful in providing for a completely independent retirement. I say that even though most were lucky to live even a decade beyond the day they stopped ‘makin’ a living’. 130 years ago you could die from things we treat today by a trip to the drugstore, or 5-10 days on an easily obtained prescription.

Whether you lived in a densely populated east coast city, or somewhere ‘out west’, retirement was, to be charitable, a challenge. Why do ya think there was such an emphasis back then on extended family? It wasn’t just to have more unpaid employees workin’ on the farm/ranch, or with jobs in the city, it was to survive financially from year to year — and that was easy compared to providing for retirement. In fact, I’d go as far as to say that retirement for most in the 1800’s was having created a family who gave a damn about you.

There was no Social Security, and company pensions in those days were not only few and far between, but penurious by design. Churches and various charities took up as much of the slack as possible. But the bottom line was, if you hadn’t saved/invested enough to support yourself ’till death, or you didn’t have an extended family who welcomed your continued non-productive presence post-working years, you were pretty much outa luck.

Fast forward to today, and take a look at the 40-something couple (or single parent for that matter) with 2-5 kids, decent employment, and relatively good health. When retirement looms 15-25 years hence, and they’re lying in bed one night unable to sleep, one wonders what that retirement looks like to them. Do they smile a bit with childlike anticipation, turn over and fall asleep, or does sleep then elude them ’till the wee hours?

The sooner you realize you’re essentially on your own, the better off you’ll be. The worst enemy most people face when confronted with this subject matter is denial. The strategy of ‘pretend and extend’ will end for many in, “Hi! Welcome to Wal-Mart.”

I’m dumbfounded to see how most folks tend to treat their 401Ks/IRAs no differently than either Social Security or the soon to be extinct (except for gov’t jobs of course) job pension. That is, they think of it as inevitable. To those who’ve relied upon these so-called ‘plans’ to fund their retirements, I ask this question:

How’s that been workin’ out for ya so far, Skippy?

I don’t mean that to sound as cavalier and harsh as it surely does as you read it. That question came a couple years ago from yours truly while speakin’ at a seminar in the midwest. I’d been comparing a few strategies I’d been implementing for clients to the job related plans now so prevalent. Someone in the audience saw where things were goin’ and took umbrage — extremely so. She said I was not giving the true real life picture. When asked if she had a 401K at work, she nodded with pride. I asked here how long she’d been contributing to it — about 18 years or so. Did her employer help out? Yes, the first 3% — dollar for dollar.

Then I asked her to do a timeline comparison. What was her 401k worth 12/2006 and what was it worth that day? (early fall of 2008)


I waited a few more seconds, then asked her the above bolded question in as kind a tone as I could muster. Though more silence ensued, no answer was necessary, as we could all see that her plan hadn’t panned out. Duh. If it’s any consolation, she’s rowin’ a boat in a flotilla made up of millions of boats being rowed by more millions of folks just like her.

Here’s what I told her then, and what I’m tellin’ you now.

You’re on your own. Take what capital you have and get it workin’ for you in a way engineered to keep you in more control. Fortunately, for the most part, sophistication isn’t required, though a professional surely is. There are two things you should be doing with laser-like focus and persistence.

1. Invest in income producing real estate with the goal to owning it debt free. Yeah, I know, it’s not that simple to execute correctly, but the concept can be understood by a slow 12 year old. Find an expert, pay them, and get going.

2. Set up a totally separate basket of retirement income by starting an EIUL or three. That brings up a true story illustrating how superior EIULs are to 401Ks and IRAs.

NOTE: An EIUL is an Equity Indexed Universal Life insurance policy. It’s another post altogether, but the end game is manifold. It provides tax free income in retirement, no-strings access to money in emergencies, and your heirs won’t pay a dime in estate taxes upon your death.

On another much read real estate blog, (not mine) I authored an extensive post about the relative superiority of EIULs vs job related ‘qualified plans’. I was tarred and feathered, burned in effigy, and generally treated without even feigned respect. The vitriol was surprising, surpassed only by the partial truths and total falsehoods used to ‘discredit’ what I’d written.

I waited awhile and tried again. Same result. Then the correction virus hit Wall Street with a horrific vengeance, and retirement plans generally lost 30-50% of their value faster than people could hit the panic button. I waited awhile for the dust to settle, then went back on the same blog again and wrote about EIULs one more time, but with the gloves off. I asked them the bolded question above. The result in the comments section that time was, as you may’ve already surmised, crickets.

The silence was deafening. The folks who had their capital in cash flowing real estate were fine. The ones who’d also rerouted or already had other funds in an EIUL, had ‘enjoyed’ returns of 0-2% annually while their neighbors saw their 401Ks/IRAs lose nearly half their value.

And for the record? I make no money directly, or indirectly from anyone using my ‘in-house’ EIUL expert. I give this advice when it makes sense cuz it’s the right thing to do.

Anywho, where were we? Oh yeah — Back To The Future

Think 19th century when it comes to planning for your retirement. As all of us can readily see the number of retirees moving in with family has been increasing, as well as those who’ve avoided it only by workin’ well into their 70’s. Let us not fantasize these trends are the result of design. Furthermore, younger family members are movin’ back in with Mom and Dad — 19th century. I wonder in what context they ponder retirement? It seems reasonably likely many of their generation will do retirement planning with the assumption they’ll be on their own, reliant solely upon the results of their own persistent efforts.

The longer it’s been since your 40th birthday, the louder you must hear the tickin’ of your own retirement clock. For many, Big Ben must seem almost silent by comparison.

Back To The Future — Tick-tock — Time is not your friend.

About Author

Jeff Brown

Licensed since 1969, broker/owner since 1977. Extensively trained and experienced in tax deferred exchanges, and long term retirement planning.


  1. The answer will not be anything related to the stock market–you like the number 10,000 … yeh it has been around for awhile now, after a 40% loss, will you live long enough to see it come back? Probably not. The question is… what is next … will it be deflation or inflation? I think mega inflation is inevitable so the answer (if you can survive right now), will still be real estate. Hang on tight. If real estate completely tanks we will all be fighting for the Walmart greeter job.

  2. Jeff Brown

    Hey Phil — I’m confused as to why you think I like 10,000.

    ‘Mega -Inflation’ may indeed rear its ugly head, but I don’t think, at least at this point that it’s inevitable. I wouldn’t put serious money against it though, that’s for sure.

  3. Jeff, I’ve been saying for forever that you can’t count on anyone for your retirement, you have to plan like it’s all on you. 25 years ago, everyone thought I was nuts for giving up on Corporate America and pensions/retirement funds and going it on my own. I’m doing okay and sleeping just fine. . .can’t say the same for many of my company-employed friends.

    I’ve always said that you have to plan to retire with no mortgage, no credit card debt and enough income to cover your lifestyle plus emergencies. My husband’s parents were Depression-babies who did just fine on that plan. My husband & I have seen 2 of the worst market corrections of the last 50 years and are doing fine on that plan. My kids (19 & 21) are now planning for that same kind of retirement — on your own, fully funded and living within your means.

    For me, real estate income has always been part of the plan, but EIUL’s are a new addition. When my husband left his last job for a new one, he had over 30 years in company-paid pension saved up (talk about 19th Century!) and we rolled it over into an EIUL. Bought the guaranteed income option at less than $120/year and it’ll guarantee full payout regardless of “market value”. Best thing we ever did.

  4. I listened to my fathers advice. Do not carry any debt in any form of credit. If he could not
    pay cash for something he did not buy it. Make sure have at $100,000. in hard tangible liquid assets. (this was 1965) Pay off your house. do not buy stuff you do not need. He lived through the great depression. He could not find a job in 1933 so he started his own business selling fruit and vegetables in a big market which rented spaces to people while he was training to be a machinist. During the war he worked at the shipyard. after the war he started his own machine shop. when he retired he was debt free. There were no 401K’s or any retirement programs other than pensions and Social Security. You had to create you own which my father did.

    Did we learn from the downturns in the economy. I don’t think so. I am working with people who were dumping every dollar they had into investments assuming they were going to reap the rewards of the past. ” The economy always comes back I am in for the long run” theu said. Where are they now? I told my friends I have been charting the economy since I read I read David Rhoade’s book Surviving a Spastic Economy in the 1970’s. Rhoades predicted every financial CRISIS. up to the present time. Each time I told them to put their money in tangible assets nobody listened. In this last dump I told them to sell all their Real Estate by 2007 at the latest. Put your money in gold and silver. Nobody listened again. Where are they now? in big trouble with their over leverage houses and stock that lost most of its value. sinking in debt. It may come back in the next 10 years. Right now I am selling their houses because they are underwater in debt at half the price they refinanced them for.

    I listened to my fathers advice. I could be retired now but I am cashing in on the real estate market now. I followed my own advice. I am renting right now waiting to buy a house at half the price I sold mine for. We made the mistake of getting into the real estate run up but we got out out in time to so we did not lose everything. We are debt free and setting our path on cashing in on the real estate market. What surprises me is that the current market has Realtors spinning because they do not understand the potential which is before them. Most of the homeowners have their heads under water just like their house are. The market will never return to the place it was 10 years ago. I have been a psychologist for the last 30 years. I have only 168 hours available every week. I can make a lot more money in real estate in those 168 hours than I can in my Psych. practice.
    Art Martin Foreclosure Solutions LLC

  5. Jeff Brown

    Terryn — Wanna give you a big hug. Way to go! You guys are a solid example of what can be done when you don’t try to go from A to B at the speed of light, or think retirement is a matter of checkin’ boxes at work. Congrats on a job well done.

  6. Jeff Brown

    Love your story, Art. The only thing I’d add, is that if investors had free and cleared their income properties, or were well on their way when this latest correction hit, they’d still be fine today. Sounds as if you and I may have had similar dads.

  7. Jeff
    I have the most secure and best retirement program available. Where can you get 15% to 40% return on your invested funds? I do not know one that will return that so I put my funds in Tax lien and Tax deeds. They are guaranteed returns and the company or stock will not go down or out of business. The economy has no effect on it. County taxes are always paid no matter who pays them. You can use IRA funds to do so there is no tax consequences. With this down turn they are available everywhere. Sometime you end up with the house for pennies on the dollar if the taxes are not paid. I have not been fortunate to get a house yet but the return is always paid. It is a win win all the way around. no possible loss of funds under any circumstances. I assume this time around I will be picking up some houses which will be free and clear of liens and mortgages. A side note my wife and I are from pre-world war II generation. We have seen a lot in the last 70 years.

  8. Jeff,
    Your comment does not make sense to me. Would you rather have a volatile retirement account which is effected by the ups and downs in the economy or one that you know will return a guaranteed stated amount no matter what happens in the economy? plus the possibility of getting a bonanza if the taxes are no paid back to you. Some people think we are taking peoples houses away from them. not so they left long time ago. we are getting them from the lenders who do not pay the taxes because they sell the mortgages so many times nobody knows who owns the notes. The county wants to keep afloat so they are more than happy to take the taxes payments from those of us who are willing to pay the taxes.

    I just entered the commercial/apartment real estate market because it is going underwater. I can use my tax payments to buy apartments in my IRA so we get a sustainable income we can take out because we are over 70 years old.

  9. Jeff Brown

    Art — What part of my comment doesn’t make sense? The one where I say your approach is relatively conservative? The one in which I observe buying gold/silver only would be more conservative? The one in which I refer to the fact that free ‘n clear rentals will yield cash flow?

    I don’t disagree with your approach one iota. Where do I not make sense? You yourself say you’re gonna buy apartments for income from the proceeds of your liens etc. What am I missing?

  10. Jeff,
    your first comment ” that’s what I call a depression mentality.”
    Many people came out of the depression as millionaires because they did not allow the depression to stop them. It was small group of people who had the available money in 1930’s. The economy was more controlled by wealthy then than now. There is more opportunity now than in 1930’s. Young people seem to have very little fear as they were not exposed to war time mentality or the sheer lack and poverty of the 1930’s. I see the words depression mentality as negative. If my father did not have the drive he had he would not have made it through the depression. My parents bought their house in 1932 in the depth of the depression fir $3300 cash.
    They said suicide was a major problem because people could not survive. There were no benefits or public assistance. People helped each other and stuck together. I remember my parents friends discussing the depression so I have a direct connection to it since I was born in 1937 during the second down turn. World war II was the only thing that pulled us out of the depression. The war was like the depression because all of the rationing. My dad bought an old bicycle for Christmas and fixed it and painted it for me. I have a lot of memories of that era. todays economy would cause the frugal people from that time to disbelieve this could happen. In that time you did not buy anything if you did not have cash to buy it.
    In do not know what your interpretation of Depression mentality is but that is mine.

    Art Martin [email protected]

  11. Jeff Brown

    “In do not know what your interpretation of Depression mentality is but that is mine.”

    Mine too, and for the same reasons. I heard the same stories you did, and have always thought of my own depression mentality as a major positive. We’re on the same page, Art. Have a good one.

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