Real Estate Provides Opportunities for Retirees Looking to Protect and Grow Their Nest Egg

Allen Shayanfekr  |

Sure, retirement sounds great. Fun in the sun, plenty of time for friends and family, and all the early-bird specials you could ever imagine. But, retirement just isn’t what it used to be.

For starters, people are living longer. A lot longer. And having enough funds to cover 20 years of retirement is something previous generations simply didn’t have to be concerned about.

Throw in rising health-care costs, pension cuts, concerns about the solvency of Social Security, and Americans’ limited efforts to sock away enough for retirement in today’s consumption-based economy – and the prospects for a comfortable retirement are looking increasingly bleak.

So, what can retirees do now to protect and grow their savings?

Many rely on safe investment vehicles like money market funds and Treasuries, but in today’s historically-low interest rate environment, these investments are hardly keeping up with inflation.

What about equities?

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Yes, the economy is strengthening and the jobs market is growing – but with the stock market enjoying the second-longest bull run in history, some market observers see the end coming sooner rather than later.

So, with safer investments likely to provide minimal returns for the next few years and the stock market probably cooling off for a while, where can retirees park and grow their nest egg?

A growing number of investors are starting to take a closer look at the real estate market as a practical way to help fund their retirement. These retirees are getting into real estate investing through real estate crowdfunding platforms that allow them to pool their money for real-life real estate investments. The money goes directly into the hands of the individual borrower to purchase, renovate, or refinance a real estate project. Investors reap the benefits through monthly dividends or interest earned.

With annualized average returns of about 10 percent over the past 20 years and favorable market conditions like low mortgage rates, economic expansion and limited inventories signaling long-term upside, the market is well positioned for growth. Real estate also provides a great opportunity to diversify assets.

Retirees, however, may not be interested in maintaining a home or rental property for capital appreciation or income. In fact, they may be looking for more-liquid, less capital-intensive ways to access the real estate market. For this very reason, real estate crowdfunding allows for strategic investment without the heavy lift of maintaining a property.

Real estate investing also provides a number of unique tax advantages that can help retirees protect their nest egg. Aside from mortgage interest and depreciation deductions, many tax-minimizing strategies can be employed that incorporate everything from capital gains and rental income to tax-free income and property exchanges.

Last year, real estate crowdfunding sites topped the $3 billion mark and crowdfunding overall is expected to grow into a $300 billion industry in less than a decade. Fewer than 10% of Americans are accredited investors yet make up 70% of the wealthiest individuals in the U.S. Many retirees qualify as accredited, and we can expect many more crowdfunding sites to embrace the average individual investor by lowering the barrier to entry.

It would be great to retire without having to worry about how long your nest egg will last. But in today’s world, where we are living longer, paying more for healthcare, and the benefits we once expected to be guaranteed are not necessarily so, we all need to pay more attention to our retirement savings. Traditional investing is certainly a prudent step for those saving for retirement. But for retirees looking for an alternative way to protect and grow their portfolio, real estate investing is worth a look.

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DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:

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