Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
In most instances, I would assume it is for two reasons. To generate passive income which will help eliminate the need to work and to help with our retirement.
Normally about this time of year, various magazines come out with an article that in my opinion is ridiculous about how much it is going to take for you to retire comfortably. There are many on bigger pockets that are probably already retired and would find those articles silly.
Having been retired for some time and running around in circles of other retired people, I have some definite thoughts on this area. I'm going to use some specific examples which hopefully will contradict what these magazine articles normally post and give each individual more hope for enjoying their retirement somewhere down the line.
Retirement can look much different to various people and I would love to have some additional input from those that are retired or possibly are preparing for retirement with an actual plan. This should encourage you even with possible troubles in the future. We all know the median income is lowering and when you find yourself unemployed and then reemployed, the majority of the time the new job pays less than the old job. Even if you are still young, I would encourage everyone to try and plan or strategize what their retirement will look like and how they will pay for it, and don't plan on too much from Social Security.
There are other threads on bigger pockets about the subject but I would really like some additional input from those that have either given thought to retirement or find themselves retired. Thanks. Rich
Investor · Fort Wayne, IN · Member since 2009 · 391 posts · 257 votes
13y
I set a goal to become Financially Independent as opposed to simply setting a retirement date. I define Financial Independence as the time when your passive income meets or exceeds your required expenses.
I achieved that goal 10 yrs ago (age 41). Although I had done an excellent job of planning for financial independence, I did not have a plan for what came next. I felt like the proverbial dog who chases cars and finally caught one and had no idea of what to do next.
I served another 8 yrs in the Air Force after achieving financial independence before I finally retired. It is really a nice feeling when you go to work because you want to and not because you have to.
When I retired from the Air Force, I still had not developed a good "what's next plan."
It was nice to slow down for a while but I eventually started two more businesses to go along with our real estate businesses.
It took a little time but I now have a very nice blend of free time and productive activity.
My advice is to spend some time contemplating how you are going to spend your "post financial independence time."
Good luck on your journey.
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
13y
I am only 38 so I am not close to retirement.
Being that my income comes from brokering commercial real estate transactions I am not like others working a job where they worry about layoffs as you mentioned and transferring to a lower paying job etc.
I did read a statistic a few years back that said on average I believe about 70 to 80 percent change careers every 5 to 7 years. I can't remember where I read that.
I do think of retirement but most people I know with tons of money do not sit around. They still get out there and create things or do investments etc. as they would get bored doing nothing all day. I see my cycle being one of closing as many commercial deals as I can over the next 5 years with the buying cycle run up. Invest a majority of those funds and spend very little but have some fun in between. Then if sales volume goes down and more people are holding with locked in low rate loans then I have cash flow from investments pouring in until the next cycle happens. I will still do sales volume then just not as robust over the next 5 year cycle is my prediction.
Really I do not think I will ever retire I will just ramp it down some. Some of my older commercial broker friends in the 60's and 70's age wise do selective brokering and make their own schedules and might work just a few days a week with some hours mixed in. They do a couple of sales here and there for existing clients but have much more in passive investments they have built up over the years.
This guy is still investing at over 106 year sold!! Pretty cool!!
Investor · Fort Wayne, IN · Member since 2009 · 391 posts · 257 votes
13y
I set a goal to become Financially Independent as opposed to simply setting a retirement date. I define Financial Independence as the time when your passive income meets or exceeds your required expenses.
I achieved that goal 10 yrs ago (age 41). Although I had done an excellent job of planning for financial independence, I did not have a plan for what came next. I felt like the proverbial dog who chases cars and finally caught one and had no idea of what to do next.
I served another 8 yrs in the Air Force after achieving financial independence before I finally retired. It is really a nice feeling when you go to work because you want to and not because you have to.
When I retired from the Air Force, I still had not developed a good "what's next plan."
It was nice to slow down for a while but I eventually started two more businesses to go along with our real estate businesses.
It took a little time but I now have a very nice blend of free time and productive activity.
My advice is to spend some time contemplating how you are going to spend your "post financial independence time."
Good luck on your journey.
Investor · Dallas, TX · Member since 2009 · 718 posts · 913 votes
13y
Like Chris L., I'm doing it for financial independence, not retirement. Financial independence to me means that I no longer "need" a standard W-2 job, that is, my income offsets my living expenses. I'm still a ways off because I invest in SFRs in Dallas, which don't cash flow well, but do grow capital nicely. I could stop acquiring RE now, simply spend the next 10 years paying off what I have, and be fine for the rest of my life, but I doubt I'll do that. I'll probably tap the equity at some point and trade up to larger multifamily.
Lately, I've been refining my goal to possibly include immediately using RE income to offset living expenses enough that I could do a lower paying profession that I couldn't currently afford, such as teaching. I think I might really enjoy it and I love the idea of having summers off while my kids are little. (I can always ramp back up once they are out of the house.)
I can't picture ever "retiring" in the conventional sense of the word. Life is too interesting and there are so many opportunities.
Investor · Orlando, FL · Member since 2012 · 431 posts · 106 votes
13y
I'm doing it for financial independence, retirement, and because it's relatively addicting. Like others in this thread I don't really see myself sitting around doing nothing once i'm "retired" but i'll certainly do less than I do now. Currently 38 and the plan is to be able to retire really comfortably by 50, possibly sooner if we can get a few good years in new construction.
Durham, NC · Member since 2012 · 498 posts · 48 votes
13y
Investors do not necessarily consider themselves as retired.
I known an international investor who recently start to talk about
retirement. He questioned himself whether he needed to make that much money and continued to default on promises he made to his wife for spending more time with the family.
By the way, he started to buy real estate in Seattle area last year.
According to him, he never invested in RE in US before but he couldn't afford to ignore this rare opportunity of the century. He said
he basically was buying recklessly. Another big investor offered
recently to buy all his properties in Seattle. He think it is way too early to sell though.
Investor · Milford, CT · Member since 2012 · 592 posts · 285 votes
13y
40, doing it for the passive income it will provide in my "retirement" years. I have a great W2 job in the IT world that took some sweat equity to build and maintain. I plan on doing it till my mid 50's only to keep building my 401k. Once I get a comfortable 401k balance I will get away from W2 and go to 1099 for 3-6 months out of the year to keep in the biz. I plan on doing that till my magic retirement age. Whatever that will be. All the while keep building up on RE. Once my RE provides financial independence I will punch out for good and sail into the sunset.
Investor · Lucas, TX · Member since 2010 · 620 posts · 352 votes
13y
I am just looking for financial independence. I don't need a yacht. I have a successful professional career but don't like 9 to 5 and not being my own boss.
I identify with the main protagonist (Peter Gibbons) from the movie Office Space:
Peter Gibbons: What would you do if you had a million dollars?
Lawrence: I'll tell you what I'd do, man: two chicks at the same time, man.
Peter Gibbons: That's it? If you had a million dollars, you'd do two chicks at the same time?
Lawrence: Damn straight. I always wanted to do that, man. And I think if I were a millionaire I could hook that up, too; 'cause chicks dig dudes with money.
Peter Gibbons: Well, not all chicks.
Lawrence: Well, the type of chicks that'd double up on a dude like me do.
Peter Gibbons: Good point.
Lawrence: Well, what about you now? What would you do?
Peter Gibbons: Besides two chicks at the same time?
Lawrence: Well, yeah.
Peter Gibbons: Nothing.
Lawrence: Nothing, huh?
Peter Gibbons: I would relax... I would sit on my *** all day... I would do nothing.
Lawrence: Well, you don't need a million dollars to do nothing, man. Take a look at my cousin: he's broke, don't do ****.
Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
13y
In my opinion, there are some really great replies in this thread. It did get turned away from what my original intent was with the questions in the opening post. Financial independence and retirement are certainly not necessarily the same thing. Most of the replies are oriented towards financial independence yet unless I missed it, not one person mentioned what that number was and when they would reach financial independence. What I was trying to obtain from BP members is what they think that number is both in monthly net income and also net capital.
None of the examples I will use later are sitting around doing nothing. Quite the contrary. They now have the time to select each and every activity they want to be involved in.
Joel- your plan is well thought out and as long as RE continues in "repetitive cycles", it will work well. Income needed monthly after taxes in your plan?
Chris L- I have a son in law that did the same thing, only in the Army. Nice to receive 50-66% pension of your last salary. That goes a long way toward financial independence. I liked your comment about spending time on contemplating what your post financial freedom would look like before you arrived there. Do you have a # when you will obtain financial freedom in after tax income and total capital?
John – it sounds like you are at a point where you are going to be making some additional decisions which will determine your financial independence point. I'm curious as to what you'd think that point will be? Again, I don't think you and I would define retirement the same way based on your last sentence in your reply.
Steve – I'm currently retired and financially independent but I certainly don't spend much time sitting around. The difference in retirement is you are able to select each and everything you want to do on a daily basis. At least, that is my definition of retirement. What is your number that you visualize as financially independent or being able to retire according to my definition of retirement?
Xing-I consider myself an investor and also as someone that is retired. That does not mean I don't have my money currently at work. I look at that as a big difference. I choose what I do each day, and I also choose when to look at my reports from property managers and construction superintendents on various projects where my money is at work. If I don't want to take time to look at the reports, I don't need to.I pushed the wrong button before I was done. I'll just do a Part 2. Rich
Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
13y
George- what is that sail away #?
Robert- I like your thoughts onI financial independence, but curious what your number will be?
The reason I keep asking what your number will be to each poster, is because my guess is that number is going to look like something out of a magazine. That was my original intent in posting this thread. Over the past 10 to 12 years, I've literally spent time with hundreds of what I consider retired people. I'm going to post later the number I visualize and it will probably be shocking to a lot of people.
The magazines continue to post a number well in excess of $1 million needed, and it might be much more now. They also seem to look at a percentage of what you earned in your last salary as necessary. I find both their methods somewhat off track from what I have seen in the real world. Now, I realize I don't live on Manhattan or in San Francisco. I'm talking about the average type of retirement for the average person. I realize most members of BP do not want to consider themselves as average and are probably not. This is evidenced by the well-thought-out replies to my original post.
I hope we will have additional posters and also previous posters to give their thoughts on what amount is necessary for their retirement years and what they visualize those years to look like. I know what mine looked like, and I will share it as an example also after more input from others.
My main purpose in posting this thread with these questions was to give hope to many people concerned about their retirement. We know there are potential problems with Social Security and we also know that most people don't work for the same company for 40 years and retire with a gold watch anymore. We also know that many companies have not remain true to their pensions. Those are a lot of things to be concerned about but I would like to point out that the amount necessary for a very enjoyable retirement is much smaller than advertised by the magazines.
I want to see some other numbers first, and then I will give an example or multiple examples of what I have seen or done. Rich
Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
13y
Thanks Matt – I didn't see you enter in. How come? If you been on bigger pockets much, you'll know I'm certainly not a techie and I appreciate your post. I even get chewed out when I have typos in my replies. I don't type very well and I use a Dragon speak microphone. I do try to catch most of my typos, but I feel it is more beneficial for me to use my time posting in more detail, than taking time to go back and correct all typos. Thanks again. Rich
PS – and now, this retired person is off to play pickle ball for three hours.
Investor · Milford, CT · Member since 2012 · 592 posts · 285 votes
13y
Rich Weese my sail away number from W2 is $1 million in 401k. My wife and I are half way there in the 15yrs of work/life. We can only hope another 15yrs to get us there. I will stop working W2 when I hit that 1 million mark and if I am still young I will do 1099 to pay for a nice steak dinner once in a while.
My financial freedom or monthly rental income would need to be in the $5,000 a month or about $60,000 a year in Net Rent. This will allow us the freedom to enjoy current life plus some travel. I am about 45k a year now. Probably can get there with 2 more multi's.
Funny I actually keep an excel spreadsheet that I call road to retirement that takes my historical and using some future value calculations on contribution and growth for a educated picture of my future.
I live pretty simple life and drive 10+ year old cars. So I don't need much to be happy. :)
Investor · Dallas, TX · Member since 2009 · 718 posts · 913 votes
13y
Robert Steele You're right the houses here do cash flow. I didn't mean to imply that you can't do so here, and mine do cash flow fine. (Also when I said capital growth, I meant a small appreciation with steady principal paydown.)
However, I've always had the impression that we aren't a true cash flow city like I hear about in some of the midwest cities. I've never gotten anything like a 25% coc return, though I work full time, don't do sweat equity, and am most likely not privy to the most smoking deals, so maybe others are.
I'm also out of fannie mae bullets, which leaves me with commercial financing with a shorter amortization and higher interest rate. Finally, and this is personal to me, I boneheadedly wasted three of my fannie bullets on 15 year as opposed to 30 year notes, which puts a crimp on my overall cash flow (but builds equity). I did this when I thought I wanted to force myself to pay off some of the house very quickly.
Investor · Orlando, FL · Member since 2012 · 431 posts · 106 votes
13y
Rich Weese My plan as it stands right now is shooting for $25k ( todays dollars ) per month and increasing from there with debt reduction and inflation. This will mostly come from rents and other investment income. I'm on track with this plan right now and it's actually not that hard to hit that number with a little discipline and reinvesting all cash flow. I have net worth projections, but rarely focus on that number when looking at retirement.
That is the amount that I think would allow my wife and I to enjoy our hobbies without having to really think about money. Obviously it won't provide for a lavish "retirement" but if I want a new toy I can always build a spec home or two and not touch any income.
The real question is am I going to have the same level of enjoyment from the hobbies I love now when i'm 50 or will they have been replace with all new hobbies?
Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
13y
I invest in real estate because I enjoy it. Passive income, college education, wedding presents, inheritance are all little reminders of the good things that are going to be by-products of my investing. I learned a lot of tough lessons during the mid 2000's about investing the right way and for the right reasons and I think my portfolio now reflects that.
As far as retirement goes, hell, I feel like I retired a long time ago. Work is a state of mind and as long as I can get up each day and go about doing the things that matter the most to me, then I'm not sure i can really call that work. So I stick to the term Passive Income instead of retirement. My passive income is pretty strong today and only gets stronger each month. Eventually I can imagine shifting more of my income to passive instead of running around having as much fun as I do working with other investors, but I don't ever see retirement in the traditional sense. I will always be running our families companies.
Investor · Fort Wayne, IN · Member since 2009 · 391 posts · 257 votes
13y
Hi Rich,
I have already achieved financial independence. I actually hit that mark around 10 yrs ago. At that time, it was a function of low expenses (no debt), military retirement pay, and a 7 figure net worth.
I actually retired from the military 2 yrs ago. My monthly rental income after expenses is 6 times the amount of my military retirement pay so my retirement pay is actually not something that I have to rely on.
We flip houses and hold a nice portfolio of income producing properties.
We have project managers and property managers so my real estate business takes about 5hrs per month. I added a couple of new business projects so I would have something productive to do every day.
Chris
Investor · Lucas, TX · Member since 2010 · 620 posts · 352 votes
13y
Rich Weese I passed the acquisition phase a year or two ago and am currently in the payoff phase. I should be finished with that in the next 7 to 8 years. I will then have $2MM in assets producing about $12K/month in today's dollars. That's enough for me thanks.
My wife may or may not still be self employed. I may or may not start my own business or do contract work on the side. Depending on how bored I get sitting on that couch all day ;)
When I read those retirement articles about needing such and such amount of money in the stock market to retire I feel like I am living on a different planet as that is so far removed from my strategy. Passive income from RE for the win!
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
13y
I live very frugal but still have fun.
About 3k a month is what I go through. I keep my level of living at a small percentage of overall what I am making yearly.
I do not know that I will ever retire in the traditional sense. What fuels me is seeing my mom and mother-in-law worry about their social security checks and medicare payouts as secondary to their primary insurance and costs rising.
I think I read something somewhere that 75% of the population dies with less than 10,000 in assets to their name.
Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
13y
George – very reasonable numbers in my opinion. You are working a great plan and I especially love the XL spreadsheet. I had the same type of checkup system. Decades ago, I listed all the properties I owned, the loans, rents etc. Then, I determined which ones I would pay off from the excess cash flow each year. Each year more excess cash flow would be available and more properties would be paid off. I still have that old sheet and look at it as a reminder of what was necessary to achieve my goals. I did add additional properties and also used a 1031 exchange for many of the original ones. It was a great system for me. I would think that $5-$6000 per month would certainly take care of most people, but not so sure in Connecticut!
John – I'm not sure whether I ever got a 25% return either. I firmly believe many of those posts are questionable in my opinion. When checking in to most of those, it becomes quite obvious that the 25% does not hold up to further scrutiny. The owner has failed to include his own hands on management, has not included his own time involvement on repairs, nor included major repairs such as the roof furnace or air conditioner. I don't use the percentage return but choose other methods for my purposes. You are not out of bullets – find owner financed properties. They exist EVERYWHERE and don't show up on your credit reports or count in the number of mortgages you may have.
Steve K –WOW! Is the $25,000 a gross or net amount? Unless your hobbies are out of this world, I don't see the need for that amount especially in Florida. I lived in the Fort Myers area recently and could exist on 20% of that amount easily! I'd love more input on your hobbies, numbers, etc. I also build specs(actually my MONEY builds them) to keep the juices flowing in Texas and Utah and have posted several threads here on bigger pockets with the results. It does provide great extra money.
Chris C-the same question I have for others – what is your you or definition of "retirement in the traditional sense?" I for one, don't believe one size fits all or that a true definition exists of traditional retirement.
Chris L – thank you. Your numbers ten years ago were even higher than most magazines would ever show as necessary. My guess is that you would've been able to "retire"and live comfortably on those numbers much earlier if you had wanted to. Correct?
Robert – I've always enjoyed your posts! I find them very down-to-earth and no BS. I'm assuming the $2 million in assets will be free and clear and is the $12,000 per month net or not, before or after taxes? Again, I assume sitting on the couch was tongue-in-cheek. I don't find those type of retired people in my circles. I agree on passive income and find the articles with projections of stocks needed etc. hilarious.
Joel – I certainly see you as a very smart man using a very intelligent program in my opinion! Again, please share your view of traditional retirement. I see you've being tremendously successful, for what it's worth.
Most previous replies are from bigger pocket numbers that anticipate the need/want for much more dollars than I think is necessary from what I've seen. I've asked for views of traditional retirement. Mine is as follows:
do what you want when you want to do it.
Have zero need to continue investing with the sole purpose of having more money to spend.
Be able to be happy with the funds in passive income to buy your toys, travel, and provide assistance to family and others.
My first example-I have a friend that is definitely on the upper end of the spectrum for sure! He has homes in Whistler, British Columbia, Lake Las Vegas Nevada, and on the big Island of Hawaii. He has expensive golf memberships in all three locations. He travels extensively, owns really fancy motorcycles(turbos) in each location. He doesn't spend what comes in monthly and also has trusts set up for all his children. He only wishes he would've retired sooner from his profession in the medical field.
I appreciate those that have taken time to reply in this thread and hope others will join in. Rich
Investor · Fort Wayne, IN · Member since 2009 · 391 posts · 257 votes
13y
Hi Rich,
I am fairly conservative and yes I could have made retirement work earlier. However, my one concern was health care. Having military retired health care benefits was the most important component to my achieving financial independence 10 yrs ago according to my calculations at the time.
Could I have made it work 5 yrs earlier? Probably, but I did not need to so I kept working and serving.
I served another 8 yrs because I did not have a good "What's next plan." I also enjoyed what I did and believed that I made a difference for those 8 yrs as well.
Good luck to those of you still working to achieve financial independence.
Chris
Aurora, CO · Member since 2012 · 2k+ posts · 1k+ votes
13y
what a great topic Rich!
I, like most of us, am investing with a goal of a passive income that will allow me to live comfortably, travel, have fun and do some good in the world. For me, the number I have in mind is 12k per month (that's before taxes). Now, that's a lot more than I've ever made so far, but I think it's possible with my 15-20 yr timeline. I quite like my life as it is, but I'd like to experience having more money as well.
I happen to have just read a very interesting book called "Affluence Intelligence", which I recommend. The authors are psychologists who work with people around their money issues. (They're the ones that coined the term "Sudden Wealth Syndrome" based on all the newly minted -and depressed!-billionaires they worked with during the dotcom boom). We ascribe money with all kinds of magic powers, most of all with the power to make us happy. But did you know there was a well documented study that showed that once people are making enough to get by without undue stress ($60k was the magic number there for some reason) the amount of money they had bore no relation to how happy they said they were? So my goals are 1) make some money, and 2) practice being happy, so I can actually enjoy it!
