Structure Your Savings for Retirement

Savings for retirement can be in many forms. But in all cases savings must be structured, with a clear goal, and lots of self discipline.

Saving for your retirement should start with your first paycheck. And most people do join some retirement plan early in their careers, but it is my experience that people are not that serious about it during the first ten or twenty years of their careers. It was certainly the case with me.

Elsewhere on this Web site do we discuss formal retirement plans and retirement annuities. You should participate in these tax deferred plans as early as possible during your career. But it is my opinion that you will have to save more for your retirement than what these plans will deliver.

Use the tools provided on this Web site to determine what savings you'll have when you reach retirement age. If there is a shortfall, there are several strategies to augment the shortfall that we discuss on this Web site.

But there is one strategy for savings that I identified too late in my career to use myself. I leaned on our children to consider it as an additional strategy and they are well on their way in implementing this strategy.

It is investing in rentable property! It could be commercial, holiday, or residential property.

The strategy is simple, but you need to do a lot of research to find the right property. The property should be well built but affordable. It should be in an area with a high demand for rentals. The mortgage on the property should be as high as possible, but the monthly repayment of the mortgage should be equal or less than your net rental income.

The mortgage gets paid off over twenty years and the net rental income then becomes another income stream during your retirement.

My instinct was to go for up-market property. Both our son and our son-in-law tried that, but found that property is expensive and it is more difficult to generate positive cash flow on the rental of up-market property.

Their investment in the blue collar rental environment is doing much better. Taxes are lower. Banks are more eager to approve 100% mortgages plus funds for improvements. Positive cash flow is much easier to achieve.

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