At what age will you be able to retire? Could you retire right now? Should you? How can you know? If you are an independent appraiser, these can be particularly hard questions to answer, since you may be mostly or entirely responsible for setting up your retirement plan. Here are some insightful tips on how to retire, geared specifically toward real estate appraisers.
Calculate how much you’ll have to retire on
You will be able to claim your full Social Security benefits between ages 65 and 67, depending on your birth year, but they will not amount to a lot. As of the beginning of this year, the average monthly SS benefit was $1,460; the maximum monthly payout for someone retiring in 2019 is $2,860. To figure out how much money you will have to retire on, combine that with your investment income and retirement savings accounts. (You might expect to work part-time in retirement, but it’s best not to count on any income from work when planning for your last years.)
Consult with a financial expert
Do not rely on websites that promise to help you calculate how much money you’ll need, in all, to retire. They are no substitute for an in-person consultation with a trusted financial expert—such as the person who currently manages your investments, if you have such a person, or a wealth management officer at your bank, or another reputable person who handles other people’s money for a living.
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Calculate how much you’ll need to retire
To figure out how much you’ll need to retire, break your probable expenses into “needs,” “wants,” and “extras. “Needs” will include housing, food, supplemental medical insurance, and transportation, among other items. (If you’re planning to downsize to a smaller house or retirement community, figure in the cost of moving.) “Wants” include discretionary spending, such as travel, hobbies, and maybe the occasional new car. If you plan to move to a new city, factor in the increase, or decrease, in cost of living. “Extras” might include whatever financial favors you might do for family and friends.
Focus on your own expenses first
At this point, give low priority to your grown children and your grandchildren. It will be nice if you leave something for them to inherit—but while you’re alive, focus on your own expenses first. Your children and grandchildren might be hurt if you explain that you can’t afford to fund their post-graduate education or help them buy a house—but they’ll be even less happy years later, if you show up at their door with a suitcase because you’re broke.
Figure out when you can retire
Before you meet with your adviser, estimate how much pre-tax income you (and your spouse and children still at home, if any) will need to live on in your retirement. Add up how much you have in your portfolio; the income you can expect from other holdings (real estate, etc.); your SS income. Ask your adviser: will your portfolio provide you with enough money, added to your other income, to allow you to stop working now? If not, how much longer should you expect to have to work?
Consider what you’ll do after retirement
Many retirees prefer to work at least part-time—if not in their current job, then in a job that’s more enjoyable even if it doesn’t pay well. Many people go to pieces without occupation. Good alternatives to a job include hobbies like baking, giving lessons in music or a foreign language, and volunteer work.
Avoid these common “don’ts”
Many retirees lose their nest eggs through foolish investments, and end up destitute. Here are some “don’ts” that you can easily avoid:
- Don’t invest your emotions. Even if a company’s prospects look good, don’t buy its stock because the CEO is a friend or because you approve of its politics.
- Don’t take for granted that income investments (such as bonds) are more reliable and less volatile than growth investments (such as stocks). Broadly speaking, stocks tend to out-perform bonds over the long term.
- Don’t trust your money to someone who isn’t completely transparent. (Think of Bernie Madoff.) Work with the wealth management department of a bank, or some other trustworthy institution.
- Don’t pay high fees. Some mutual funds, for instance, offer good returns, but the fund manager has to be paid.
- Don’t forget about inflation. If the government prints more money—inflating the currency—the value of that money will drop, causing a rise in prices. Look for ways to make your investments inflation-proof.
- Don’t trust investment advice from TV commercials—such as those that urge you to invest in commodities futures. Once an investment is advertised on TV, it’s likely to have outlived its best days.
- Don’t buy annuities. They promise a steady return—but you lose control of your money, which could be devastating if, for example, you have a calamitous health episode.
- Don’t “play the market.” Rely on steady, trustworthy investments that will survive a downturn. When the stock markets crash, speculators get hurt worst. Conservative investors just have to weather the storm.
Article written by Joseph Dobrian. Joseph Dobrian has been writing about commercial and residential real estate, and real estate-related finance, for more than 30 years. His byline has appeared in The Wall Street Journal, The New York Times, The New Yorker, Real Estate Forum, Journal of Property Management, and many other publications. He is also a noted novelist, essayist, and translator. His website is www.josephdobrian.com, and he can be contacted at firstname.lastname@example.org.
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