Social security is heading toward insolvency; can it be saved? We do not know what the future holds; however, there are things in our purview we can control.
I used to be a full-on government-retirement-plan lover. My goal was to serve 30 years in the Marine Corps, do another 20 years in the federal civilian workforce, and collect social security.
In reality, I retired after 24 years and became financially free, never having to work again. So, how did my plans go so far off of the rails?
New Years Passive Income Resolution 2023
Planning your own retirement. The short answer is that I read Robert Kiyosaki’s line-up of books. He taught me that only I can help myself; nobody is coming to save me.
We can create a much better Happy Cash Flow Retirement system than relying on Social Security and Medicare. I took Mr. Kiyosaki’s words to heart and retired at 42.
I want to reverse engineer my mindset and dig into how vital it is to save yourself. When you save yourself, you become “an insider” and can exert much more control of your situation.
I joined the Marine Corps in 1999, at age 18. My parents didn’t have much but gave me discipline and brains.
The military retirement plan is amazing, and I always planned on doing at least 20 years. However, receiving 50% of your paycheck after 20 years didn’t seem enough.
Will Being Cheap Make You Rich?
Robert Kiyosaki taught me how to invest in assets to generate passive income. Therefore, setting aside a portion of my military cash flow toward collecting assets would increase my household income.
I went from zero dollars in passive income in June 2019, to earning close to $5,000/month today. At age 44, I earn more in passive income than I would at age 70 using social security.
What does social security mean to you? Are you depending on social security to save your future and allow you to retire? There is nothing wrong with that.
One of the things that hurts Americans the most is the word “independence.” Most of us want to live independent lives in empty homes and apartments.
Long Form Content is Future
If people living on social security teamed up with one another, they would have a much better chance of surviving and thriving during retirement.
Imagine you and your spouse own a four-bedroom house. You two stay in the master suite and get two roommates who collect social security.
Now, everyone inside the home is in a much stronger situation. You can consolidate cars and share resources. Honestly, that’s how most elderly people in other countries live.
If you want to live an amazing independent lifestyle that allows you to travel and dine out, you’ll have to do something far more drastic with your finances. You’ll need to own real estate.
YouTube vs. Your Job
Time to purchase real estate. I owned three houses before I read my first Robert Kiyosaki book. Deep down, I knew I wanted to purchase homes for my children early.
However, owning real estate is a mindset (beginner, intermediate, advanced) you must prepare for.
Owning real estate isn’t a great-rich-quick scheme, as it will take years to become profitable in most cases. Our first home in 2008 was a complete disaster.
Let’s look at my current real estate situation at age 44, and predict how it will look at age 70. Then, we can compare my future rental income to my proposed social security paychecks.
My current real estate posture. I own three homes and collect rent from all of them. To be clear, I deeply love collecting rental income.
Make Your Primary Residence Your Retirement Plan
My first home, which is in Arizona, produces $2,300 in rental income minus a $1,800 mortgage payment and $200 for the property manager. It has about 25 years remaining on the mortgage due to a refinance to 3.0%.
My second home is in Florida and produces $1,900 in rental income. The mortgage is $1,300, and I manage it myself. The interest rate is 3.5%, and the mortgage has about 23 years left.
Our final house is right down the street from the second one. It is our primary residence, the mortgage is $1,700, and we have a roommate that pays $1,000 per month. The interest rate is 2.0%, and we have about 27 years left on the mortgage.
Now, let’s fast forward 26 years into the future. We can assume that I pay off all mortgages and that rents will rise by 3% annually.
The numbers look like this: house #1 will produce $4,900, house number #2 will produce $4,100, and house number three with the roommate will produce $2,100.
Overcoming Depression through Progression
The total rental income I would collect at age 70 would be $11,100. That is a massive amount of passive income generating from our properties.
The Social Security Administration predicts that I would receive about $2,000/month if I wait until age 70 to collect. That’s a $9,000 difference between the two products.
Owning multiple properties. Is it difficult to own multiple properties? No. However, you must have the stomach to deal with tenants.
Sadly, many people do not want to deal with tenants and other issues that arise. However, it’s all part of the process.
Remember, I said that if you want a fantastic independent lifestyle, you must do things others are unwilling to do.
Mortgage-Backed Securities vs. Treasury Bonds
The more people you serve, the richer you become. Being a landlord is doing a service to others. You are responsible for the well-being of their living accommodations.
Many people believe that being a landlord makes you a terrible person, and that’s okay. Everyone is entitled to their own opinion.
However, some people cannot save money to purchase a home, maintain a house, or pay property taxes. Many people cannot handle the minutiae of owning a property, and landlords do the heavy lifting for them.
If you are in your 40s or 50s, you still have time to purchase some rental properties. The rental homes do not need to be in the same area as you.
Retirement Planning with Index Funds
There are many great deals across America, including Biloxi, Mississippi, which is right on the Gulf Coast. Investing is not about today, but about tomorrow.
Conclusion. I plan on paying down all of my homes once I reach $10,000/month in dividend income. This will be in about six years.
Do you trust that the government will protect social security until you retire? I sure don’t. It’s always good to have your own plan.
To Become Rich, You’ll Need Leverage
The toughest part of owning assets is the initial purchase. Once you own real estate, many options will open for you.
I can extract some equity to purchase even more properties. Truly, the world is your oyster once you commit to owning and keeping real estate.
If you don’t have the mindset to own real estate, I suggest you read “Rich Dad’s CashFlow Quadrant” and “Rich Dad’s Guide to Investing.”
These Robert Kiyosaki books will help you adjust to the reality that you are your own best retirement plan. I made the adjustment, and am forever grateful. Good Luck!
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