Real estate investing for your future
According to the Social Security Administration Social Security makes up at least 90% of major sources of income for 34% of the people age 65 or older and is at least 50% of income for another 31%. That’s a lot of people relying pretty heavily on their Social Security benefits! If 
we assume these people receive the average benefit amount of $1,051 per month, 34% of the retired population lives on less than $14,000 per year and another 31% lives on somewhere between $14,000 and $25,000 per year.
By the year 2041, social security trust funds will be exhausted and the amount of collections will only cover 75% of the costs. That means that by the time anyone that is currently 34 or younger begins receiving benefits there won’t be enough money to go around. Combine this with the national average savings rate at .9% for September 2007 and I expect an even higher percentage of our retired population will be having a hard time making ends meet in the future.
What can you do about it? One way is to utilize real estate as an investment in your future. Figure out how you can purchase property now and hold on to it. Live in it, rent it or vacation in it. It doesn’t matter what you do with it, just hold onto it and let it appreciate. According to the National Center for Real Estate Research ” …housing remains the primary store of wealth for most Americans.” They go on to say, “Housing is also a leveraged investment so that even small percentage gains in home values can be large relative to the downpayment invested in a home.”
Even if you are young and retirement is still 40 years down the road a property purchased now could be sold at any point in the future. Perhaps it will benefit you when your children are headed off to college and you need a little extra to pay the tuition, or to pay your medical bills in a time of crisis. If you treat your property as a piggy bank rather than an ATM machine and let your equity accumulate over time you can build a nest egg suitable for whatever your future holds.
If you are interested in more information regarding the benefits of real estate ownership please contact the Mountain Living Team.
November 7th, 2007 at 11:38 pm
Meredith, using your home as an ATM as you say above, has caused a lot of the foreclosures we are seeing now, as people ended up owing more than the home was worth when values went down. Long term, homes appreciate, but you can’t always expect it in the short term. Real estate markets always move up and down, but the overall trend is almost always up! I have heard recommendations to buy a rental home each time a baby is born so that by the time the baby goes to college, the house can be sold and the money used to pay tuition. The tenants have actually paid for it over the years. A great idea!
November 8th, 2007 at 8:46 am
I agree Joanne. People want instant gratification. Nobody saves up to buy things anymore. They borrow the money to get want they want now and will work out the details of how to pay for it later. Unfortunately, as you mentioned, often times they can’t pay for it later and end up losing their home to foreclosure. Real estate is a great investment vehicle, but just like anything else a wrong turn can take you a little ways off of the desired course. The beauty is that you can find your way again. Sometimes it just takes a little bit longer to get where you want to go.
November 8th, 2007 at 10:02 pm
Mededith - even though we’ve always said we’re not counting on Social Security - but doing the math is really scary. I agree real estate is a great vehicle to increase wealth. enjoy’ed your article - any relation to Joanne? - Cyndee Haydon
November 8th, 2007 at 10:15 pm
Cydnee, doesn’t she write good stuff? She is on AR too. Meredith is our business and marketing manager and I am her proud mother. She has been in our office now for about a year and a half and adds so much to our team! Joanne
December 11th, 2007 at 4:49 am
Enjoyed the article. I’m expecting my first child this February so I guess it’s time to buy a 2nd home :-). Not a bad idea at all.
I am one of the co-founders of a new company The Society. We are focused on creating a community and marketplace where luxury 2nd homes are rented out. I would be curious to learn about rental resources you recommend for your home buyers.
Kind Regards, Mike
December 14th, 2007 at 3:23 pm
Congrats Mike on the new baby! What fun you have in store!
The easiest way for you to see what we tell our clients about renting their properties is to read our blog posts about it. Here’s the link —
http://www.mountain-living.com/blog/20...oosing-a-property-management-company/
There are links to more related articles at the bottom of that post. Let me know if you still have more questions.