CFG Retirement

Real Estate for Retirement Income: What to Know

Jan 22, 2024

Retirement is the golden age of life when you finally get to retire from work and enjoy the fruits of your labor. However, the prospect of living off of just your retirement savings can be a daunting task. That is why it's essential to look for additional sources of income, and rental real estate can be one of those sources. With its strong returns and relatively inefficient market, rental real estate can be an excellent addition to your retirement income plan. In this blog, we will discuss what you need to know to invest in real estate for retirement income.


First and foremost, it's essential to know that the relative inefficiency of the real estate market can produce bargains that offer strong returns, making rental real estate a good source of retirement income. As an investor, it's vital to identify the right property to invest in, considering the rental market trends, appreciation capacity, and location. Additionally, rental income from tenants can help pay off your mortgage, and the property's appreciation value can provide a secure investment for the future.


If you need to borrow to buy a rental property, do so before you retire. Many retirees choose to invest in rental property because they want to generate passive income in retirement. However, when you retire, your income will be significantly reduced, which will significantly impact your creditworthiness, so it's best to secure your loan before you retire.


Choosing a good location is more important than finding the cheapest property. You may be tempted to look for a cheap property to invest in to maximize your return. However, it's crucial to look for a property in a desirable location, close to amenities like shopping centers, hospitals, and schools. This will not only attract tenants but also increase your property's value.


You should look to earn about 8% per year on your investment after costs. Real estate investing is not always a guarantee, so it's important to temper your expectations. However, a good return on investment for a rental property is around 8%, excluding any operating costs. Keep in mind that unexpected expenses can arise, so it's essential to have a buffer for any emergencies.


Real estate investing can be an excellent addition to your retirement income plan. With its strong returns, relative inefficiency, and potential for long-term appreciation, rental real estate can help you generate passive income and secure your financial future in retirement. However, it's essential to choose the right property, secure financing before retirement, focus on a good location rather than a cheap property, and have reasonable expectations for returns. By following these tips, you can successfully invest in rental real estate and enjoy the fruits of your labor in retirement.

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By Vince Oldre • 23 Apr, 2024
As you approach retirement, one of the key factors that can impact your financial future is taxes. Understanding how taxes work in retirement can help you make informed decisions about your savings and investments. In this blog post, we will explore the basics of taxes in retirement and provide tips on how to minimize your tax burden so you can enjoy a comfortable and financially secure retirement. One of the first things to consider when it comes to taxes in retirement is the different sources of income you may have. Common sources of income for retirees include Social Security benefits, pensions, withdrawals from retirement accounts like 401(k)s and IRAs, as well as investment income. Each of these sources may be taxed differently, so it's important to understand how they will impact your overall tax liability. Another important consideration is the timing of when you withdraw funds from your retirement accounts. If you have a traditional IRA or 401(k), withdrawals are generally subject to income tax at the time of withdrawal. By strategically planning when and how much you withdraw from these accounts, you may be able to lower your taxable income and reduce your overall tax bill. Additionally, consider taking advantage of tax-advantaged savings vehicles like Roth IRAs. Unlike traditional IRAs, withdrawals from Roth IRAs are tax-free as long as certain conditions are met. By diversifying your retirement savings across different types of accounts, you can create a tax-efficient withdrawal strategy that maximizes your after-tax income in retirement. It's also important to stay informed about any changes to tax laws that may affect retirees. For example, recent legislation has made changes to required minimum distribution (RMD) rules for retirement accounts, which may impact how much you are required to withdraw each year once you reach a certain age. Keeping up-to-date with these changes can help you make informed decisions about your finances and minimize any surprises come tax time.  In conclusion, navigating taxes in retirement requires careful planning and consideration of various factors such as sources of income, timing of withdrawals, and changes in tax laws. By understanding how taxes work in retirement and implementing strategies to minimize your tax burden, you can enjoy a financially secure retirement with more money in your pocket. Remember to consult with a financial advisor or tax professional for personalized guidance tailored to your individual situation. With proper planning and knowledge, you can make the most out of your retirement savings while keeping more money in your pocket for the things that matter most to you.
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