Podcast Episode 391: Do You Have Too Much Real Estate in Your Retirement Portfolio?
Everyone wants to find the right mix of investments, but it’s easy to become over-concentrated in a specific asset. Real estate investors will often run into this dilemma as property values rise and home equity increases. In this show, Jake Doser, CFP®, CPWA® and Nicholas J. Colantuono, CFP® will answer a question about how much real estate is too much and how should you start shifting investments as you approach retirement.
With $250,000 in a 401(k) and over $2,000,000 in rental property equity, this person wonders if selling a property to boost their 401k is a wise move. It could be, but every person will have to answer that based on their retirement needs. A comprehensive retirement plan will take all the factors into consideration like cash flow, diversification, liquidity, and income.
The demands of property management should also weigh into your decision. Make sure managing multiple real estate properties fits into your desired retirement lifestyle. If not, the return on investment may be irrelevant if it doesn’t support the time commitment required to manage the properties. It’s also worth considering heirs and whether they would want to manage these assets.
The discussion always comes back to the idea of diversification and the risks of having too many eggs in one basket, particularly in real estate. The 2008 housing crisis serves as a reminder of the potential volatility in property values. Evaluate whether you can withstand a significant loss in equity or prolonged vacancies and what that would mean to your retirement.
Finally, let’s be thinking about tax planning as part of the planning process. With potential high taxes on property and rental income, having diverse liquid assets is crucial. It’s not just about what you earn but also about what you keep after taxes.
By addressing both philosophical and mathematical aspects of retirement planning, Nick and Jake provide a comprehensive guide for those looking to retire with confidence. For more strategies on maximizing Social Security, healthcare income, and taxation, make sure you check out our retirement planning workshops.
Here’s what we discuss in this episode:
0:00 – Intro and question
0:57 – First step
2:53 – What are your retirement needs?
4:38 – Over-concentration
6:09 – Numbers to address
Information presented in our podcasts is considered current as of the created date. Over time, some information presented may become stale. We recommend you consult with your Financial Professional before making any changes based on information contained here.
Johnson Brunetti is a marketing name for the businesses of JB Capital and JN Financial.
Investment Advisory Services offered through JB Capital, LLC. Insurance Products offered through JN Financial, LLC.
The guarantees provided by any type of insurance contract are based on the claims-paying ability of the insurance company.
Related Resources
-
Avoiding the Retirement Tax Trap
Once you retire, understanding your tax implications becomes even more crucial. After all, taxes don’t disappear in retirement. In fact, as you begin withdrawing from your retirement savings, you … -
Podcast Episode 405: The Retirement Tax Trap
Prefer to watch? Click here to watch and listen on YouTube. The term “tax trap” comes from the misconception that you’ll need less income in retirement, so you’ll pay lower taxes. This leads ma… -
What Should I Watch Out for When Reviewing My Retirement Tax Return?
Now that tax season is over and your return is filed, you may be wondering what you need to review in preparation for next year, especially if you’re approaching retirement. In this week’s Mone… -
Retiring In Uncertain Times
During times of economic uncertainty, it’s natural to feel overwhelmed. It seems like every day there’s a new update from the markets. But rather than reacting to the noise, focus on why you have … -
How Do Tariffs Affect the Stock Market?
If you’ve been tuned into the news lately, you’ve probably heard a lot about tariffs. The current administration’s latest economic push has introduced a wave of uncertainty in the market. But what… -
How Do I Get Out of Debt Fast?
Most people with debt want to get out of it quickly and efficiently. To do that, you first need a clear understanding of your financial situation. Second, you need a clear, actionable plan. In … -
Why Do I Need to Account for Inflation in Retirement?
Today’s question is: What is inflation and why is it important to account for in my retirement plan? Inflation is the rising cost of goods over time. Meaning, it will cost you more money next year… -
How Does a Tax Return Work?
As tax season concludes, it’s a good time to refresh your tax knowledge. In this week’s Money Wisdom Question Series, Ian Fergusson, RICP® discusses how filing your taxes works and why it’s essen… -
What Is a Fiduciary?
When it comes to managing your money, trust is everything. That’s why today’s question is one of the most common and important ones we receive: What is a fiduciary? In this week’s Money Wisdom … -
Podcast Episode 403: How to Approach Finances in a Second Marriage Later in Life
Getting engaged later in life is an exciting time, but it requires different financial planning conversations. With blended families, different retirement timelines, and evolving goals, couples in…
