Retirement Planning – Build Your Own “Personal Pension Plan”
Your retirement plan maybe in trouble from dwindling employer funded retirement plans and pensions which are becoming extinct. It seems that every day in the news there is a story about how social security is under-funded, a company is cutting their retirement plans or declaring bankruptcy because they can no longer afford to pay retiree benefits.
You can no longer count on employers or governments to fund your retirement. You must do it on your own!
Today is the day to start thinking about funding your own retirement plan. We like to call it “Build Your Own Pension plan”. If you are younger than 65 and have never heard of a pension before, as Pensions from private employers are increasingly uncommon, not to worry.
In the past, major employers, cities, and states, provided a retirement income or pension for employees that worked with them for a specified period of time. A pension is basically an agreement that said if you work for us for 25-30 years, at retirement, we’ll pay you a portion of your salary until you die. These were great for our parents and grandparents but pension have become extinct. Have you ever had a job offer that includes a pension? Probably not.
The good news is, you do not have to wait for an employer or work for the government to get a pension. You can create your own. In fact, there has never been a better time to create your own personal pension and take charge of your retirement. We see people like you do it every day using rental real estate.
You can create your personal pension many ways, but the steps are very similar.
4 steps to creating your own personal pension:
- You invest in rental real estate that provides cash flow income each month after paying all bills;
- You wait as the property and its tenants pays off its own mortgage for you by the time you plan on retiring;
- Once the mortgage is paid off, you retire and replace your current income with your rental income providing you an income or “pension” for the rest of your life;
- You travel, golf, and enjoy time with your family the rest of your life. Then, pass it on to your legacies.
It’s not complicated, but do you know how many people actually follow that plan? Very few. Anyone can do this and you don’t necessarily have to have a lot of money to get started.
For example, a few years ago my brother rented a duplex from a really nice couple. We got to know them and found out they work for the US Postal System and deliver the mail every day. They both decided they need to take control of their retirement. One day while delivering mail in a neighborhood they really liked, they saw a duplex for sale and an opportunity to provide for their future retirement. They ended up purchasing the duplex and renting it out for enough to pay the mortgage on a 15 year note, its expenses, and to have just a little extra cash each month. Later that year, there found another duplex that came up for sale in the same neighborhood and they purchased that one. Moving forward 5 years and now they own 10 duplexes in a market that rents for about $700-1000 per unit.
I asked them why they were buying all these duplexes? They said they were investing for their retirement. Both of them had a plan to retire within the next 15 years (they were only about 40 at the time) and these duplexes would all be debt free by then and they would live off the income they produce. I started adding it up in my head, and even without increasing the rent, the duplexes will be generating close to $20,000 per month in income without increases in rent. Incredible, that was WAY more than they made now. Not bad for a couple postal workers. They are the small percentage of people who will actually have their income go UP at retirement. Pretty smart, and you can do the same,without dealing with tenants, and complaints.
Their personal pension plan wasn’t revolutionary, extravagant, or even that difficult given enough time and a little effort. This couple wasn’t “rich” and they didn’t live extravagant lives. They didn’t have a business or trust fund handed to them or even quit their jobs. You don’t even have to do all the work for yourself (we’ll talk about how to do this in our next article). But this couple was willing to do what most people are not. They were willing to develop a plan for their future, take action, stick with it, and not deviate from it.
While your retirement may be in trouble and traditional pensions are a thing of the past, there is something you can do about your retirement.
You can build your own personal pension to make sure your income continues to come in long after you decide to retire. This personal pension will allow you to live the retirement of your dreams well after your last payroll check comes in.
