An interesting topic came up during a recent Cashflow game.
If you don’t know what that is, it’s a fun board game that helps to increase your financial intelligence and teaches you how to do deals in real estate. I host these games to show players that what they do on the board can be done in real life.
It’s certainly true for me.
As you know, I’ve been a long-distance investor for a few years now who focuses on multifamily properties in Charlotte, North Carolina. If you don’t know, you need to read a few of my earliest articles!
Now back to the topic…
At the game we started discussing how much money we need for retirement. While everyone’s number is different, it’s a sure bet that you’ll need more than you think.
Also, what may be a lot of money to me isn’t what you’d consider a lot of money.
That prompted me to do a quick video. Give it your attention now:
Is $400,000 Even Enough for You?
As my guests and I sat at the game discussing a good number for retirement, the amount of $400,000 came up.
One of the women at the table had never played Cashflow before, so she was excited about what she was learning. In fact, she’s the one who initially came up with that number.
This lovely woman told me about a friend of hers who had “a lot of money” saved for her retirement. I asked how much was “a lot” for her and she said it was $400,000.
This woman’s friend is 70 years old and she thought that would give her plenty to live on for retirement. When she shared that bit of information, I wanted to learn more about her friend… and more importantly about her… because I knew $400,000 wouldn’t be enough.
I wanted her to see that, too, so I asked her a few more questions.
Q: How much additional income is coming in every month beyond her earnings?
A: She said she was receiving about $2,000 in additional income. (This can be from a pension, rents, dividends or other non-earnings.)
Q: I asked how much she spent every month.
A: She said $6,000 a month.
That’s when I saw a glint of quick understanding flash across her eyes. Uh, oh… it wasn’t adding up!
Doing some quick calculations, we determined that if she wanted to continue living the lifestyle to which she was accustomed in her retirement years, she would need to save more than her friend… more than $400,000. She’d need about $960,000 saved up before the age of 70.
That’s if she were to live only 20 more years. If you think about it, lots of people are living 10 years longer than that and then some. What happens if you surpass the age of 90?
So… What’s Your Number and How Are You Getting There?
Your number depends on the age you are right now and when you will retire.
It depends on what you’re doing to save up enough money to have a great retirement.
It also depends on whether you’re investing in real estate so you can collect passive income month after month… or if you’re putting your money into the stock market or just your 401K/pension plan.
There are a lot of variables when it comes to saving for your retirement.
- If you’re 25 you may not even be thinking about it, but guess what? You should be.
- If you’re 35, you should be thinking about it just a bit harder.
- By age 45, you better have a solid plan in place. Real estate investing can give you returns where other investments can’t. And it’s a less risky play than the stock market.
- If you’re 55 years old and haven’t done much to save for your retirement, it’s not too late. You can do deals in real estate and do just fine. In fact, that can be a path to a great retirement fund.
If you have been putting money away, for example in an IRA or other retirement account, that’s great news. You can have your retirement account invest in real estate. I work with a number of Baby Boomers who do that and it works brilliantly. (The caveat is that the returns go back into the retirement account, so you’re actually growing your retirement money through passive streams of income.)
If you’d like to chat with me about this topic, I’d be more than happy to, but you have to schedule a time with me to do so. Use this link to schedule a time to speak with me: