A Financial Expert’s Insider Tips for a Comfortable Retirement

By Vanessa Sheets –

You’ve heard it countless times.

Invest safely and preserve your nest egg for retirement.

That’s the secret for those approaching retirement and planning to rely on investments to cover their living expenses.

But if you’re like many of Karen King’s clients who are over 50, there’s a problem with that advice:

How can you preserve capital when you don’t have the $2 million you need to retire and make sure you don’t outlive your savings?

Maybe you’ve been downsized and can’t get another job. Maybe you want to retire early but need to find a way to support yourself well into the future.

The good news, says financial expert Karen King, is that if you’re like most people in their 50s, you have enough equity in your home to allow you to consolidate your debt and invest, earning 8-10 percent in returns.

Where can you get 8-10 percent returns these days, you ask? Look to real estate, advises King.

As a licensed mortgage agent and financial educator, King is the master of ceremonies for the Worry-Free Wealth seminar presented in Canada by the Sans Souci Educational Institute, a company providing unique solutions to financial challenges. The company offers current financial planning information and education for investors seeking alternative ways to increase their wealth.

You Can’t Gamble With Your Money Anymore

“When you’re working toward retirement, you need certainty,” says King. “It has taken you years to save your money and in the stock market, you can lose it all in a day.”

And mutual funds cost 3.5 percent or more in annual management fees, taking a sizable bite off your earnings. As part of the stock market, they are impacted by the volatility of the market and very few funds beat the market averages.

“The worst thing people can do is play the stock market derivatives that promise high returns with equally high risk,” King says. “You don’t own anything when you invest in derivatives, so you’re virtually gambling on the possibility of a stock going up or down. If you lose the bet, your money is gone forever.”

Redouble Your Efforts to Grow Your Money

Real estate is the most predictable return on your money if you know what you’re doing. But, says King, it can cost a lot to get in.

Here are her top tips for older adults looking to get into the real estate game:

1. Don’t be afraid of debt. Not all debt is created equal. “Borrowing to invest is just smart, especially when you don’t have a lot of time,” King says. “One of my clients was investing $1200 a month to fast track his retirement fund, but he would only be able to contribute $65,000 by the time he reached age 65. He is smarter to borrow $100,000 for $600 a month and invest the other $600 a month in estate planning or pay off his credit cards.”
2. Tap into your equity and invest. “Most people in their 50s have between $100,000 to $600,000 of equity in their homes,” says King. “For every 100K you lend in private mortgages, you can get 7.5-10% return, earning you at least $750 extra income a month.” 

Instead of using your home equity line of credit for vacations and living expenses, invest that money to make more money. Invest in private mortgages or lend to multi-million dollar real estate projects as a low-cost way to reap the rewards of real estate.

3. Live in a triplex (or quad). Buy a triplex instead of a single family home to bring in multiple sources of income, spreading the vacancy risk over two or three units.
4. Create additional passive income. After 50 we don’t have the energy to take on a second and third job, King says. Rent out a room in your home for an additional source of income. Foreign exchange students can fetch anywhere from $500 to $1000 a month, depending on the accommodations.
5. Make your money work harder. “Transfer low-performing investments into higher income fixed rate vehicles,” King advises. “The stock market has been crashing this year. My portfolio took a hit of 22.9 percent; we have clients who have seen 30 percent decreases. Rather than stand by and do nothing, it is often wise to liquidate those assets and put the money into a more predictable asset class like mortgages.”

Start Planning for Your Financial Future

Investing safely for retirement doesn’t have to mean earning only 1.1 percent interest. The steps above will help you build wealth faster for a comfortable and happy retirement.

Of course, you could decide that the cost of refinancing is too high. You may not want to spend a few hundred dollars up front on penalty and appraisal costs.

Or you can do the necessary work to make the equity in your home available to invest and earn you tens or hundreds of thousands toward your retirement.

It’s your choice. What will you do?

Vanessa Sheets is a health journalist and content writer for print and online magazines and businesses. Check out her website at TheHealthWriter.com.

Thanks to our sponsor Sans Souci for working with us to bring you this content to help you plan for a comfortable and happy retirement.