When we talk about retirement, most people think of saving as much money as they can during their working years. They stock the money away in their investment accounts and hope that by the time they quit working, that money will last them until the end of their lives.
But what if it doesn’t? That’s a HUGE risk to take, as far as I’m concerned. Because once you realize that your savings has run out, you’re at the worst time in your life to work. At 92 years old and 20 years out of the game, you can’t simply return to your job or practice.
With careful planning (and an optimistic approach to your life expectancy), you can ration your money out so don’t spend too much. But what happens when you’re faced with that sudden health care cost that eats up a year’s “salary?” Do you skip your grandchild’s wedding on that exotic beach because you’ve spent your money for the year? That’s no way to live.
Wealthy people have two things in common:
First, they have little or no debt. You can’t be wealthy while owing other people money.
Second, they have secured multiple streams of income from diverse places. If one dries up, the others continue to fund their accounts.
While it’s excellent advice to save what you can now, you should also be thinking about building other streams of income. You will want the security of money coming in next week during your twilight years so you can plan ahead.
If that sudden medical expense or far-off wedding does come up, you can manage those events without the anxiety of an unsure future or the pain of downsizing your life.
How does real estate help?
Owning a tangible asset like real estate helps retirees for a number of reasons.
- You receive regular payments. The longer you stay in, the better your investment returns. A piece of property usually sticks around. It’s a real thing, not something abstract like orange juice futures. Every month the tenant cuts a rent check and you get your share.
- Your buying power remains stable. A $100 is worth $100 today, but next year it could be worth $97 or $95. Imagine that sort of erosion on your life’s savings and you’ll understand why people rarely keep their retirement funds in cash. As general prices inflate, so do rents historically, therefore real estate income helps you hedge inflation.
- You can cash out in an emergency. I always recommend that our investors stick with us as long as they can. Time is an important function of our equation here. But in the event of a truly cataclysmic life emergency, a crowdfunded real estate project gives you a better opportunity to pull your cash out without going through the hassle of actually selling the entire property.
Written by Mark A. Mascia, President and CEO of Mascia Development
Mark manages the investment and operating activities of Mascia Development, a diversified value real estate investment firm that acquires, owns and manages retail, medical office, family offices, multi-family, and industrial real estate properties in the most promising long term growth areas nationwide. Through crowdfunding, they create powerful real estate opportunities for high net worth individuals.
A fully integrated real estate company, Mascia Development has in-house capabilities in acquisitions, financing, re-development, and construction; and their principals have experience in property and portfolio management, leasing, and maintenance.
Mark has a strong career in real estate, previously managing a property of portfolios valued over $1.1 billion. Mark has worked at Archstone-Smith (a former publicly traded REIT) and Monument Realty, one of the largest office real estate developers in the Washington, DC metro area. Mark teaches real estate development and finance at New York University.
For more information, visit www.masicadev.com.
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