The business world has completely turned 180 degrees for me in the past 6 months. From becoming totally TwitBooked (the result amazing social networking, and meeting with all the great people I’ve connected with online) to using the net to grow my business…things have really taken off!  It’s great when the company you work at also see the potential of the Internet.  Re/Max Realtron Realty has taken HUGE steps to learning and using the web in an effort to become a tech savvy brokerage. 

I was really please to read the latest edition of our company newsletter and discovering that they’re officially blogging.  What makes it all the more sweeter is, they haven’t hired a ‘starbuck-buzzed” techie to write the blog…it comes write from the mouth (well keyboard) of one of the co-owners, Alex Pilarski.  Below is the latest blog post from Alex, which offers some great insight in to the ever important question: “How Much Do You Need to Retire?“:

That’s a real monster under the bed, isn’t it? What do I mean? Remember when you were a child and you thought there was a monster in your room? If you closed your eyes tight and stuck your head under the blanket, the monster would not see you and go away. That’s called the ostrich syndrome. If you can’t see the problem, it will go away. While this approach worked with bedroom monsters, it does not work with real monsters, such as retirement.

The first step in overcoming your “monster” is to face it, to acknowledge it; otherwise you cannot escape or defeat it.

Let’s look at the retirement monster.

Have you ever noticed/wondered about the senior citizens working at Wal-Mart, McDonalds, or serving coffee at the local diner? Do you fool yourself into believing that they are there because they are lonely and are looking for company?

Let me be brutally honest with you.

They are there because the $1,000 per month they get as their old age pension is not enough to pay for rent, food, hydro and clothes! How did that happen to them? Was it because they were mean, nasty, of a different culture or just not as smart as you?

Well, once again, let me be brutally honest with you.

They were once JUST LIKE YOU. Young, vital, full of promise and potential and never planned for their future, JUST LIKE YOU! You can learn from their mistakes or commit them yourself. That greeter at Wal-Mart could be any one of us if we follow the same path as they did. You decide.

Step one:

See the problem. You will get old, you will stop earning at your current level, and you will need extra income to supplement your old age pension.

Step two:

Calculate how much you need. Unfortunately, it will be similar to what you need today. You will still need cars, clothes, holidays, rent, and taxes. No more kids at University or weddings, but grandkids are just as expensive! All of that income has to be passive since you do not want to work at 85 and what happens if you live to 95?

If you need $75,000 per year now, that’s what you will need in the future. Yes, inflation occurs but it will be the same for your sources of income so that will not be a factor.

Step three:

Figure out where the income will come from.

Term Deposit

$1,000,000 term deposit at 4% annual interest is $4,000 per year. So to get $75,000 you need a $1,875,000 term deposit or another source of income, a rental property or an income generating business.

Rental Property

To generate $75,000 annually, you will need to generate $6,250 NET monthly via rental income. Purchasing a property, amortizing it over 15 years, means that the mortgage is paid off in 15 years and the rental income is net. You need two properties like that which today rent out for $3,125 monthly.

Income Generating Business

Coffee shops, flower shops, food franchises, stores, are all forms of income generating businesses. The problem with them is that they require work and effort. Being cash businesses, the owner has to be there, which is not really retirement!

Give Your $$ to Others to Manage

For example, the stock market, Bernie Madoff and other no muss, no fuss, high return schemes. There is no Santa Clause, there is no free lunch, and there are no quick get rich methods. (Unless its illegal and you are looking forward to a huge guy named Bubba as a cell mate.)

Retirement is a difficult monster. But it’s one that has to be faced by men and women alike! In our society, the husband takes care of the wife. With 56% of couples getting divorced and women living longer than men, the smart woman starts planning her own retirement.

So, there is pain in managing a rental property, there is pain in saving money for a down payment and there is pain in prospecting daily to make money for your retirement. But if you DO NOT, the pain of not having, and working in your 70’s, 80’s and 90’s is much worse!

You decide. You can pay for life now or later, but you will have to pay!

–Alex

Act on what Alex advises and give me a call…i’d love to help!

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