Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I'm not one of those agents that wants to work forever. The issue I see is that some of the older agents are amazing and sharp as a tack, and others are too forgetful. The problem with the forgetful ones is that they don't realize they are. It creates serious issues in transactions trying to get stuff done. I just don't think it is okay to represent someone on a large financial transaction when you are starting to lose your faculties.
I haven't thought too hard about retirement yet since I'm just turning 50, but I'll figure it out in about 5 years. I have been doing a SEP this whole time though. I max it out every year. My amount changes based on what I make so my CPA tells me every January what I can put in for that past tax year.
I have been contributing to my self funded SEP IRA for my 20 years (and prior) in the Business through American Funds and Vanguard. It helps reduce my taxes and has grown well over this time period.
You can contribute about 18% of your income PreTax I believe. Your accountant should be able to give you the numbers yearly. I always set some aside during the summer months for this contribution.
Insurance? Just work till your 65 and hope Medicare is there to take care of you. I just went on it and it's saving me about $1000 a month in Insurance premiums.
I had to go into the open market and buy it since my spouse was a partner with me in the RE business. This is where it helps to have a spouse who has a corporate job with benefits.
Prior to Obamacare you could get a good policy here in TX for $300-500 a month. Obamacare caused that price to go up quite a lot for people my age. An individual policy now can easily cost $1200-1500 a month. That's a huge problem for the average agent.
Wish they would pass some laws where we could join together as an Association or Brokerage and get our coverage. It's one of the big flaws of being Independent Contractors.
Insurance? Just work till your 65 and hope Medicare is there to take care of you. I just went on it and it's saving me about $1000 a month in Insurance premiums.
Quote:
Originally Posted by TarHeelNick
And what about the 36 years before that?
First, your question....
You either need to make enough money to be able to afford a "catastrophic policy", or go uninsured until you can. The reality is a measure of risk of injury and what do you have to pay for every month if you get injured and simply cannot work. Assuming you are healthy and don't have any chronic medical conditions that require treatment, then it's hard to tell a young healthy person they must have HI at a cost of what - $400/mo in premiums?
We're going to have to fix/improve health insurance sooner or later.
For whatever reason - Obamacare, how NC reacted with BCBS as basically the monopoly provider, etc - my health insurance on an HSA with a $6K deductible rose quickly from $600/mo to $1,200/mo, and was going to become like $1,700/mo. That's me and 2 dependents; the wife is covered at work. So, we now went on her policy, and the premium for me and the 2 kids is like $600/mo .... for traditional health insurance. One drug I'm on has gone from costing > $100 to costing $20. How can that be? If they're getting CASH from me (the monthly prescription doesn't go against the deductible) it's 5x the cost of BCBS' cash?
THN - as for retirement, you should work out your base budget and stick to that. Have at least 6 months, and preferably a year's expenses in savings. Pay your quarterly taxes (I'm hoping they've explained that to you!)
It's the beauty of the real estate business. You sell a $300K property and everybody thinks you just made $9K cash. In reality, you're on a 60% split as I recall - and maybe at only 2.5% - so you got paid $4500. Take 1/3 of that for income and self-employment taxes and put it in the savings account. So you really only made $3K on that, not 9K.
Once you've saved a years' worth of expenses, then you can start saving for retirement through whatever vehicle seems best .... I've never heard anything was better than a SEP. If you're making enough money, add a Roth. But I've always understood you could contribute a lot more to the SEP than a Roth.
That's one of the reasons I joined KW from Pru years back. Profit share will help contribute to my retirement. The company is focused on wealth building, not just income building. Of course you have to take advantage of it and it has to be a focus. I know there are lots of outside agents who seem to hate KW, but with the right mindset there are lots of opportunities for growth. Referrals are another great way to continue your income. To me why should a real estate agent/broker ever retire. While at some point you may want to give up actively working with buyers or sellers, all those phone calls and clients you built up over the years should earn a steady referral business around the area, around the country, and around the world.
Last edited by TeamLynn; 05-22-2018 at 01:02 PM..
Reason: Wanted to add referral info.
In all seriousness though; as someone brand new to the field; what do most people in the RE business do to plan for retirement?
I have a retirement fund from my previous employer. They will let me keep it there for a few months but then I'll have to move it. I can take it out as cash (which would be a pretty significant tax hit) or roll it over somewhere else. Was thinking of a Roth IRA.
I dig the RE gig a lot. Feels like one of the best decisions I've ever made; but long-term things like retirement (and health insurance) are still a somewhat unsettling question mark.
A Roth is post-tax money, so probably not a good option. Roll it into a traditional IRA.
As someone else mentioned, you can do a self-employed IRA and put in significant dollars per year ... A Roth, is post tax and only allows (currently, per year) $5,500 if you are under 50 or $6,500 if you're over 50.
A Roth is post-tax money, so probably not a good option. Roll it into a traditional IRA.
As someone else mentioned, you can do a self-employed IRA and put in significant dollars per year ... A Roth, is post tax and only allows (currently, per year) $5,500 if you are under 50 or $6,500 if you're over 50.
A Roth is post-tax money, so probably not a good option. Roll it into a traditional IRA.
As someone else mentioned, you can do a self-employed IRA and put in significant dollars per year ... A Roth, is post tax and only allows (currently, per year) $5,500 if you are under 50 or $6,500 if you're over 50.
Quote:
Originally Posted by TarHeelNick
good to know!
A Roth is a good idea as a component of your retirement planning, particularly if you think you will fund other qualified options and want to save further, and expect income tax rates, or your bracket, to increase in the future.
This was a major factor in my move this coming week to a new brokerage, one that at least offers 'something' to show for you having a halfway successful RE career.
Who knows how it will work out in the long term, may be windfall, may crash and burn. See me in 20 years.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
