Long Beach Real Estate-Long Beach Condos

 By:  Jeff Brown

WARNING: This post is long, isnt very funny, and involves concepts requiring explanation. Although I cant promise youll be ecstatic by the end, I think maybe, more likely than not, youll have a serious conversation with yourself, or your spouse. One more promise: Ill try to be funnier and shorter most of the time. :)

So what the heck is this Purposeful Planning stuff? Its what my entire professional philosophy is founded upon, thats all.

Unless you think arriving at retirements door with a very cool income (read: high income), and much earlier than you imagined is mostly luck, doing things on purpose matters. Does luck matter? Oh yeah. How many people do you know who started investing in real estate some time after 1996? Theyre easy to identify at social events. Theyre the ones holding court, dispensing wise tidbits on how to turn less than a hundred grand into over a million in five years.

I can tell you exactly how right now, cuz its so easy youll kick yourself when you read it.

Just wait until youre sure the appreciation in your area is gonna hit 20-40% for the next five consecutive years employ leverage execute a couple tax deferred exchanges to keep the fire burnin hot then collect your newly minted comma, ready to insert into new XL sized net worth.

Of course, when you mention the hyper-appreciation as maybe being the major factor in their success, they tend to turn uppity on you. :)

Purposeful Planning is what makes or breaks retirement plans. Its like gravity: you dont have to believe in it to feel its consequences. Its part of what I call economic physics. And like gravity, it can be used for your benefit, or ignored at your peril.

First, you have to know where you are now, financially. Its much like finding a new store at the mall. You find the directory, locate the new store, then head off. Oops, you forgot something. We cant get from point A to point B without knowing where point A is exactly. So we find the little icon that says, 'You are HERE, and proceed to the new store.

The 2 most common investment myths

There are two myths I hear repeated constantly from folks during our first meeting. First is, their very strongly expressed view that hitting retirement with zero debt is their #1 goal. Following quickly behind that is, 'we just dont have the capital to get started.

Imagine a 40-something married couple living in their Long Beach condo. They bought their condo in 1999 and still love it. Whats happened since they bought it? Its more than doubled in value, thats what. The current market value could well be hundreds of thousands more than they paid. And since they have the original loan still in place ah, Helllloooo? Anyone home? Theyre almost drowning in available, and accessible  investment capital.

But this, they say, is the problem. If they tap into their nicely inflated equity, theyll be increasing their debt, and that simply cannot be allowed to happen. The reason is almost never that they cant afford it.

That mindset worked for Grandpa, but is literally asking for disappointment in place of the magnificently abundant retirement of which youve been dreaming.

Because Grandpa worked under a totally different set of rules than we do today. Very few folks actually were able to buy a home in his day. Also, the threat of having his home loan called 'due and payable at any time, was always a potential and at the lenders option. So he was motivated to pay the dang thing off, preferably yesterday afternoon at 4:30.

Add to that the fact Grandpa knew if he worked hard, kept his nose clean, and reached retirement age, his company would give him his hard earned pension. Add that income to his Social Security check, along with a free and clear home, and hed have it made in the shade.

And for the most part, that strategy, that Plan if you will, worked like a charm for decades.

Those rules dont apply to them. Besides, Grandpas idea of inflation was what he did to his cars tires. Our couple? Since they were in junior high all theyve ever heard about was inflation. Also, instead of the pension Grandpa had, theyre in charge of saving and investing on their own. And that was one of the biggest rule changes.

Add the fact that a starter condo, in even the lowest priced areas of Long Beach is still somewhere around a quarter million clams. You can see they have almost no chance to live Grandpas experience.

Lets look at what would have happened to him if hed retired in say, 1990. He arrived at age 65, ready and rarin to go, with his free and clear home, his Social Security check (probably less than $800) and, if he was particularly frugal, $200,000 in the bank.

Hes now 82, and his savings are gone, due to the cost of living. He has no tax shelter whatsoever, so the income from his savings was fully taxed by both the feds and the state. His retirement has not turned out anywhere near what hed planned. If not for his kids, hed be in real trouble.

Yet, what would he have replied if youd have asked him, when he was 30, (1960) if hed like retiring with around $25,000 a year? Before you answer, remember this: In 1960 the median income hadnt yet reached five figures annually. Now you know his answer. :)

Hed of thought you had the fabled Magic Wand. Retire with more than 2.5 times what hed ever made in his life so far? His only question probably wouldve been, 'Where do I sign up?

There are thousands of retirees who are victims of what I coined years ago as Grandpa Economics. It wasnt their fault, because the rules changed while they were in the middle of the stream. It wasnt fair. Inflation, taxes, the way everything became so dang complicated, finally took its toll. Grandpa was caught in the crossfire of massive economic and cultural change. Lets see how it came out.

 

Hes the father of one of my clients. He and his wife are in their 70s and very healthy. They live in a state contiguous to their son and his family, which includes three grandkids. Their very old house is paid for, requiring constant maintenance. Theyre annual income is around $35,000 a year over half of which is taxable. A few years ago, because of the expense, they had to stop flying to see their son and grandkids. To save money, they drove.

This spring they had to cancel a long anticipated visit because they couldnt afford the gas it would take for the trip. Let that sink in. Fortunately the rest of my clients siblings live in the same town as his parents, and they take excellent care of all their needs.

This is what our Long Beach couple is planning for, though theyre blissfully unaware. I hear these two myths quoted to me a few times each month, so Ive developed a question in reply. Ill pose it here.

You can have a free and clear home with your savings and Social Security at retirement.

 

You can create a Purposeful Plan that gets you to retirement with a five figure monthly income, much of it tax sheltered. Of course, youll probably have a house payment too.

One of the downsides to my job, is hearing stories like my clients parents and often.

Is the real life Grandpa living out the retirement he anticipated, or is he living out a life sentence?

A magnificently abundant retirement doesnt happen through luck, at least most of the time. It happens as the predictable result of a Purposeful Plan.

 

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