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Retire the Right Way

by Joeann Fossland

lady_portarait Joeann Fossland

Do you have an "escape plan?" You know, a well thought-out vision of when and how you will leave real estate? Or, maybe, it's not even about leaving, but rather becoming financially secure so you can work when and if you feel like it.

Whether you are 30 or 60, having an escape plan in place can mean the difference between using your real estate career to make your dreams come true or working well past when others are retiring because you are without the means to do otherwise.

In our business, few of us work for a company that offers retirement benefits. We are independent contractors with the responsibility of creating our own plan. It is easy to neglect this, especially when times are less than flush, but the tried-and-true method is to set up something consistent and pay yourself first.

Perhaps that means 10 percent of each commission or a monthly amount that is debited from your bank account should go toward your retirement. Whatever method you choose, the sooner you put it into place the better. So, let's take a look at five essential steps to retiring right in real estate:

1. Know your financial needs. What income will you need monthly in retirement to live the lifestyle that you desire? For most of us, it will be somewhere around 20 percent less than our monthly obligations now, according to the averages. However, your individual situation may be much different. You may need to meet with a financial planner to realistically determine this. 

2. Know "by when." Pick a date when you want to achieve financial security or retirement. This can be adjusted later, but to have certainty rather than chance, work with a specific date to allow you to determine exactly what you'll need to do each year between now and then.|

3. Know the plan that suits you. Here’s where you can make some choices about which path works best for you. Because we are real estate agents, we can do some legal "insider trading" and use our knowledge to identify deals that are solid investments. Your plan could include:

  • An IRA or other traditional retirement savings plan. Most financial planners will want you to invest in the stock market, but that isn't your only option.
  • A self-directed IRA that is managed by a third party by law, which allows you to funnel your money into other investments, such as real estate. With a Roth IRA, you gains are not taxable. This takes some research and education but could be a lucrative option.
  • Buying real estate as an investment. I met a real estate agent with a plan to buy one investment property a year for 10 years and then retire on the income from the properties. This worked for him. Now is a fabulous time to take advantage of the market prices and bargains. The best part of this option is that you can leverage your money as well, when you're putting down 20 percent instead of 100 percent.

4. Consider other options. If you are running your business like a business – instead of one person coordinating a series of transactions – you can have a viable business that could be sold when you are ready to retire. Technology has allowed this option to become feasible, because databases and systems are valuable business assets. 

This option is tricky and many have sold their businesses only to take them back a few years later. If you think this is an option you might use, start now in branding and positioning your business to have the elements that a buyer would want. Do some research and talk to others who have successfully done this and even others who tried and failed. If you haven’t taken the PMN Course "The Business of Your Business: Formula, Financials, Function & Freedom," it is available online and in the classroom and can help you design exactly what you want! 

5. Don't overlook the low-hanging fruit! This is a unique time in real estate. The joint circumstances of average age and poor market conditions have resulted in more than 400,000 people leaving the industry in the past couple of years. Some are retiring, and some have gone back to a more structured job situation. This presents a huge opportunity. These individuals built relationships and had clients and their sphere of influence, who trusted their real estate knowledge. That leaves a lot of "orphans!" 

Consider building a community of people who will refer that business to you. Women's Council offers one of the most effective referral communities in real estate. Why not take it one step further and prospect with agents who are leaving the business to make it a win/win/win. Their clients and friends will get awesome care from you, they will get a referral commission and you will have access through relationship to clients you would not have had otherwise. Consider using the tracking and training at mygreenparachute.com to give you some comprehensive tools to build this as part of your long-term plan. 

Retirement, or even the thought of leaving real estate, may seem a long way off to many of us. However, some well thought-out planning can give you options and freedom in choosing that day. So what's your next step?

Posted May 2012

Joeann Fossland, GRI, PMN, has been a Women's Council member for more than 29 years. She's worked in real estate as an agent, marketing expert, international speaker, trainer and personal coach. Her gift is helping people be wildly productive while living lives they love. She is certified to teach courses for REBAC, SRS, e-PRO and Women's Council. She was recognized by a Stephan Swanepeol poll as one of the "Top 25 Most Influential Women in Real Estate." You can subscribe to her free "Tuesday Tips" by visiting her website. Her e-mail address is joeann@joeann.com. You can also connect on Facebook and Twitter

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