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What connotations does retirement bring up for you?
When I think of retirement it brings up images of spending time doing when I truly desire to do rather than what I believe I must do to help my family. If you read my introduction you might even be able to guess what I want to do in my retirement. As of this writing I receive money for my services in counseling. My dream is to help people for a very nominal charge (just enough for people to believe they are receiving something of value and investing themselves in the process).
How about you? I have not idea how old you are or how often think about retirement, but I would encourage you to take a few moments and do so now. Are the connotations pleasant, or frightening?
I will share some stats I was recently given by someone. Be careful with stats.... A famous man once stated: "There are three kinds of lies: lies, damned lies, and statistics", so take these numbers with a grain of salt (especially because I've looked around to validate these numbers and have had a difficult time with some of them).
These are the stats:
-Only 40% of Canadians contribute to RRSPs
-The average contribution to RRSPs in Canada was $2,790 in 2010
-The NY Times reported that in 2010, %75 of Americans would retire with less than $30,000 in savings (I realize this is the US, but it still scares me)
- 49% of the middle class will retire poor or near poor in retirement living on a food budget of $5/day
-This stat was also in the NY Times. The article can be found on their website at: http://www.nytimes.com/2012/07/22/opinion/sunday/our-ridiculous-approach-to-retirement.html?_r=0
-Half of retirees in Canada will realize a 25% decrease in their standard of living
-58% of Canadians expect to be working full or part time jobs at the age of 66.
-The maximum combined Old Age Security and CPP is less than $16,000 per year
-This is the most anyone can receive from these two public financial helps in a year at the age of 65!
Questions Rumbling in my Brain
Some of the questions that pop up in my mind when I read these numbers are: With the governments of Canada and the US printing vast amounts of money (in economics this is the very definition of inflation), how will retirees keep up with the consequent rise in inflation rates coming in the next decade or two? What percentage of return on an investment will a couple need in order to even keep up with inflation? How about if they want to beat inflation? Are RRSPs the only way people are investing? What kind of returns are people receiving from their RRSPs? What will happen to the people who cannot afford to retire? What other investments are people focused on in order to retire without worry?
I have a personal goal for how much I want in my 'retirement fund' when I retire. This number is substantially higher than what I hope to be making annually for the next 15 years. Why is it higher? For a few reasons. First, with inflation rising I believe I will need more future devalued money than I currently will need. Secondly, living costs can often rise in retirement if there is any need for medicine or assisted living and I don't want this cost to fall to my family members. Third, there is a very good chance my wife will survive me for up to a few decades (Teresa has some long living blood in her veins) and I want her to be fully taken care of no matter when I pass. Lastly, I don't want to live with a budget that restricts how I live. I prefer to live with a budget that enables me to invest in others (both with my time and with my money). If I have more than I need coupled with a spirit of giving to others and helping others, the term 'retirement' has extremely favorable connotations to me. I choose to think and plan for my retirement years as those when I am most able to invest in others because I have the life experience, wisdom, and money that frees me to be valuable to others.
So What?
You may ask 'so what'? So what if this is your retirement dream, Mark? Everyone has something different, what makes yours relevant to the conversation? I write these musings because I have a long term focus, not short term. Anything can happen in the short term, but history has proven that there are investments we can rely on over decades with less risk than others. Real Estate is an investment that fits this bill. Do you want to become a millionaire next year? Go into high risk stocks or purchase lottery tickets and hope beyond hope that you'll win. If you want to financially secure in 30 years, understand real estate and make wise purchases that allow you to be in that position in the future after someone else has paid off all the debt of that real estate.
In my next post I want to begin to focus on the multidimensional nature of real estate. While I will attempt not to hammer on negative aspects of other investments, I will focus on the positive aspects of real estate that most other investments cannot touch because I believe there are more ways than one to reach desired goals. There is a way I know, however, that works extremely well for those willing to learn a little each year and plan ahead.
If you would like to learn more about investing in real estate please contact me at the email address listed at the beginning of this article or go to my website at: www.akerahomes.com/investing-in-real-estate.html
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