The Boring, Plain Vanilla Retirement Strategy With AWESOME Results (No High Paying Job Needed!)

The Boring, Plain Vanilla Retirement Strategy With AWESOME Results (No High Paying Job Needed!)

4 min read
Jeff Brown Read More
So, here’s the deal. You’re young, have a great job, are payin’ the bills, have found yourself a superb husband or wife, and are enjoying life. Thing is, you realize you’ll likely never pull down six figures each per year, so how do you invest for your retirement?
You’re married, pretty soon there’s a kid or three, and before ya know it, there’s a minivan in the garage. At some point, it makes sense for Mom to stay home ’cause the childcare bills are stoopid high, so why work, right? Meanwhile, Hubby’s been slowly but surely rising up the ladder at work, getting raises and the occasional bonus. He’s up to around $60,000 a year before taxes. He had to change jobs to get there, but that decision paid off.

You bought a home after the first kid using FHA financing. You stayed inside your budget for sure, but still, with one job and a couple kids, two cars, and, well, just livin’ life, you’re not exactly saving impressive dollars. When your second kid hits first grade, it’s decided that Mom can work a part time job while they’re both in school. She nets out around $1,000 a month, which takes off the pressure. Between them, they figure out they can each put just $250 monthly into self-directed Roth IRAs. Not much, but better than a kick in the head.


Median household income lately has hovered around $52,000/year, give or take. Add a spouse and maybe some kids as in the above example, and we can easily discern how building your real estate investment property empire might be a bit of a stretch. This explains the DIY trend, as conventional ways of acquiring income property are closed to so many these days. Zero money down, “other people’s money,” blah blah, yadda yadda. I’ve been doin’ this since forever, and I can say with the clarity of first hand experience and observation: For every investor you hear of who’s wildly succeeding in “creative” acquisition of real estate, there are 20 who’ve lost what little money they had. Think about it. If it was so dang easy, why isn’t everyone and their Aunt Fannie doin’ it?

Related: The Average Retirement Account Has Less Than $100k: Here’s How Real Estate Can Help

Here’s What’s Absolutely Doable

First thing, stop contributing to your work related retirement plan. In my experience, it’s a waste of time. The 401k concept at work has now been around for over 30 years and is the poster example of what profound failure looks like. Don’t believe that? Ask your parents about theirs. It will be eye-opening to say the least.

Open up a completely self-directed Roth IRA — your spouse too if you’re married. We’re gonna use the above described couple as an example of what’s possible with real-life financial limitations. Married for 13 years now, Hubby’s only with his second employer and loves working there. The balance on the former employer’s 401k wasn’t much after all those years, just $25,000. They decide to roll that over into a separate pre-tax, self-directed IRA. Rolling it all into his Roth IRA would simply be too expensive at this point. Since he’s just 35 years old at this point, what’s the rush? He has ’til he’s retired, surely no sooner than 59.5, to get that cash into his Roth slowly but surely.

The Million Dollar Question: In What Will You Invest?

Discounted notes, either directly or indirectly. By indirectly, I mean into some sorta group investment vehicle. But let’s not get bogged down on that. My experience with discounted notes/land contracts investing goes back just over 40 years. Bought my first on in May of 1976 when Ford was in office. I was 24. Since then, I can say this from my own experience:

The next performing note/land contract I buy that from day one to last day yields less than 10%/yr will be the first. Period. No exceptions. No waffling. Real life. Does that include notes on which I had to foreclose? Of course it does. You simply can’t invest in discounted notes for that long without foreclosing every now and then. Anyone telling you different is either hopelessly ignorant, or they think you are. Bad things happen to good people.

How Does it All Turn Out?

To review: Hubby has rolled over the $25,000 from his previous employer to a self-directed IRA. Between the both of ’em, they’ll be putting $500 monthly into their respective self-directed Roth IRAs. All three of those accounts will be invested into discounted notes secured by real estate, all in first position. This all starts at age 35, continuing ’til Hubby retires at 65. For the fun of it, let’s also take a look at the scenario of his retirement at 60.

  • Age 65: They have built their Roth IRAs up to a value of, rounded down a bit, $1.4 million.
  • Monthly payments based upon just 8% cash on cash: Over $9,300. At 10% cash on cash: Over $11,500.
  • Age 60: At that point, they’ll have reached a balance of around $860,000.
  • Monthly payments based upon just 8% cash on cash: Over $5,700. At 10% cash on cash: Over $7,100.


Related: Want to Retire Early? Sorry, But Much of Your Net Worth May Not Help

NOTE: Remember now, all this was done inside a Roth wrapper. Over time, they rolled over the $25,000 from the pretax IRA to Roth. What’s the point? Simple…

All that income will be tax free!

Furthermore, even after retirement and contributions from them into the plans cease, and the notes continue to pay off early and at random. No taxes will be owed on the profits. They’ll rinse ‘n repeat into oblivion. The results of that process will be to get random tax-free raises in retirement and until they’re long gone. Beat that with a stick!

Anyone can do this as long as they know a seasoned pro. It doesn’t hafta be me. There are all kinds of pros out there with my experience and moxie. Trust me when I say I ain’t the Lone Ranger. Find a pro, and figure out if you wish to buy notes directly or through an investment group or fund. The best thing about this simple plan is that it IS so simple. It’s also boring, mundane, and like plain vanilla ice cream in a bowl, no chocolate sauce.

But the tax-free retirement income is definitely not boring or mundane. It’s more like the best banana split ever.

Any questions about the above strategy? How are you planning to fund your retirement?

Leave your comments below!

Think your 401K can sustain you through retirement? You may want to think again -- and explore how this easy, mundane strategy can produce amazing results.