What do you want for your retirement? What type of things do you plan on doing? Where do you plan on living? Do you want to go on vacations? There are so many things you can dream about when it comes to your retirement. For most of us though we want the best retirement that we can possibly have. There is a lot that has to happen for many of us to get to that spot where we feel very comfortable about our retirement. I for one know I need to continue to save and I need to continue to check my retirement plan to make sure it is where it needs to be for my current situation. I know that my life is still young enough that in ten years my retirement needs will more than likely be quite different than today and that is why continued retirement plan checkup is important. While I save and push hard to the best retirement I can have what am I really saving for? What do I want out of my retirement? What is my dream retirement?
I feel like my dream retirement is very reasonable and attainable as long as I work at it. So what is my retirement dream? My dream is to be able to have a second home somewhere I love to vacation. Somewhere whenever I arrive I just feel happy, excited and somewhere that re-energizes me. I want to be able to use this second home not just as a place I can vacation at whenever I want but actually live there half of the year.
Is this crazy? It may sound crazy but one thing I realize is that with a little pain today I can attain those goals I want down the road. If I put off saving or making the appropriate sacrifices today then every year that passes my ability to create that dream becomes much less possible.
A perfect example is buying a new car. I don't need one, but I really would love one. My car has roughly 140,000 miles. It hasn't broken down yet nor does it constantly need repairs. So while I may have the cash to buy a new car I am not going to because it isn't a need yet. I am going to save that money, invest that money and do the things today that make the difference down the road. Trust me one of the biggest things I see today is that many people need instant gratification. With that people have a hard time saving ANY money. The point I am trying to make is simple, would you rather have a new computer today or a new car in 10 years. A new car today or another home in 10 years? Hopefully my point makes sense.
So beyond saving and sacrificing today what else can be done to ensure I have a second home by the time I retire? The smartest thing that I can do beyond sacrificing and saving is to use my retirement account to actually buy that second home. This is commonly refereed to as a real estate IRA. Basically your IRA instead of investing in stocks and bonds is invested in real estate (my second home for retirement). Now, there are some rules that make investing in real estate with your IRA a little annoying and that you must be aware of as to not avoid your real estate IRA. For example, while your IRA owns the real estate (again my second home I will use when retired) you cannot live in it, nor anyone in your family. Here are some of the rules you must know, A Real Estate IRA Allows You to Invest in Real Estate Through an IRA
Why should you use your retirement account? One, because you probably have money saved in this account and because it is smart to diversify outside of stocks and bongs. Now probablyl the biggest reason to use your IRA or 401k to purchase real estate is because you get the tax benefits that come with an IRA or 401k. If you would like to know all of the tax benefits that come from buying real estate through a retirement account feel free to contact us.
Once you have purchased that real estate inside of your IRA what should you do with it? We have just the advice for you. Read Maximizing Your Real Estate IRA to find out about the rules and how to get the most from your real estate IRA. Also, arguably the best thing you can do with your real estate IRA is to rent it out. Check out, Position Your Rental In Your Real Estate IRA To Stay Competitive.
Author: Nick Barker