Podcast Episode 204: Inflation Concerns and a Real Estate Retirement Dilemma

Today’s Wisdom:

There’s some sentiment going around that inflation might be a problem financially in the near future. Joel will share his thought on the matter and what impact he thinks it might have on planning. Plus, we’ll address a question that came in recently about real estate and small businesses in retirement.

Want to save time? Click the timestamps below to jump ahead to specific spots in the episode.


What You’ll Learn:

As we approach the mid-point of the year, one of the biggest topics we’re hearing about as it relates to planning is inflation. With spending going up and more government proposals on the table, people have been wondering about how much inflation could increase in the coming years.

So that’s where we want to start on this episode of The Money Wisdom podcast. The hyper-inflation mode of the 70s and 80s isn’t likely on the table, but there’s always some concern when interest rates are going up and the economy is overheating. When these things happen too quickly, prices go up and it causes the dollar to have lower purchasing power.

We’ve had very low inflation for some time so it wouldn’t be the worst thing if it settled back in around two percent. So you should be planning for inflation as part of your investment strategy if you haven’t yet.

The other discussion we wanted to have on the show today stems from a question we got recently. This person is close to retirement and wanted to know if they would be better off selling the building they own and investing the cash or would it make more financial sense to sell the chiropractic practice they own and rent the building to the new owner?

There are a few things to consider with this scenario, but you have to think about these two things as separate businesses. Now, Joel admittedly doesn’t know much about the chiropractic business so it’s hard to speculate on that side, but he does have a good understanding of real estate.

The key to owning real estate is can you find a tenant that is stable and that can pay you a cash flow that makes it worth it. A million-dollar property netting you $30,000 each year (a three percent return) is an investment that could likely do better elsewhere. But if it’s a $250,000 property that generates $40,000 every year, then that’s a great asset to hold onto.

So, it’s a real individual decision as to which path you want to take but having a plan for which is key. During this discussion, Joel also explains why he decided against owning the property where he has his office. That should give you an idea of what other factors go into the decision.

Let’s get started with the show. You can listen to it by using the audio player above and click on the timestamps to skip to a specific topic of conversation.

[0:28] – Should we be worried about inflation?  

[4:09] – Marijuana legalization and dogs

[6:20] – Mailbag question on small business owner retirement

[8:55] – Why Joel doesn’t own his office

Thanks for listening to this episode. We’ll be back again next week for another show.


Final Thoughts:

“The first thing to find out is do you have enough assets to produce the income that you want, the lifestyle that you want, because you’ve already done the hard part.”

– Joel Johnson

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