Reality Check Q&A #14

Gary North

Oct. 27, 2009

RETIREMENT

Your age: 47
Your location: Falmouth, Mass
Your occupation: Research Engineer
Your retirement date: February 2022 to 2027
Your #1 goal in life: To continue present lifestyle while retired (more time)
Deadline date: February 2022 is the earliest

For me to continue my lifestyle, I think I'll need $50K+ in 2009 dollars. My 403b now sits at about $250K. This is only 5 years at present value. If I keep working for another 16 years and keep up my 20% contribution, that will add another 4 years for a total of just over 9 years. That's if my account keeps up with inflation and the tax obligations. My accrued benefit will add something to this total, but I don't know how much.

It seems to me, I won't have enough money for my planned retirement. The way I see it, I could lower my standard of living, earn extra money now to add to my retirement fund, plan to continue working on a part time basis during my retirement, or find a way to make a better return on my retirement fund. The last option would be to move to a lower cost of living country.

You are correct. You will not be able to retire. I congratulate you for running the numbers. So few would-be retirees ever do.

You have not fully faced the problem. You will not be able to support yourself in the lifestyle you want with anything except a full-time job, unless you create a stream of passive income. Real estate is one way. Starting a business is another.

Rather than trying to beat the smartest people on earth in your retirement program, better to pull it out and invest in your part-time business or real estate investing program. Give it two years of testing before you do this.

INVESTING

I'm 47 yrs. old, 20 yrs. at current job, income $100k/yr. No debts of any kind (still waiting to buy a house and want to pay cash---time to buy, yet?). I currently have $400k in my 401k and it is in the Templeton Foreign Government Bond Fund. If the European banks' insolvency threatens European governments' solvency/stability, where should the money be moved to? The fund has done well so far, due to the bond bubble and the dollar's fall. If the world economy worsens, might the foreign bonds still be the place to be? I'm torn, because the Fed's beige book reports said today that the recession is ending. If true, the dollar will rise and so will stocks here. What do you think?

Do nothing. Sit.

REAL ESTATE

In 2005 I sold urban apartments. I put after-tax proceeds in precious metals and T-bills. Is it time to use T-bills to buy rental houses / apartments in my small town and pay cash or leverage with seller financing?

It is time to start shopping for houses owned by distressed sellers. After you have seen about 75 of them, you will have a good idea of what constitutes a bargain. I think real estate prices for distressed sellers' houses will fall throughout 2010. There is no hurry. But your idea of getting into houses is on target.

CAREER MOVE

Age... 49 - 50 in December
Location... Canada
Occupation... whatever pays - preference is freelance writer
Calling... none
Retirement date... never
#1 goal in life... none, other than avoiding second bankruptcy
Deadline date... none

You've often complained about software manuals being difficult to use.

I've worked as a tech writer. Manuals I've written have helped simplify users' experiences. I thought that by making the manual fun and interesting, users would go to it instead of making a call to tech support.

Trouble is, companies don't care. Technical writing follows "conventions". That's the only thing HR idiots care about when hiring tech writers.

Even though most companies refuse to recognize the demand for Camtasia-like instructional videos and aren't interested in supplying them. I'd like to think somewhere, an intelligent software developer wants a better User Guide.

Question: How can I assess whether or not a market exists for a fun, irreverent, easy-to-follow user videos?

First, visit a site that tried this: www.screencastcentral.com.

They changed their business model. Then they found a much better way to make money: helping people use Amazon's S3 videos. Their new site: www.ezs3.com. It's a profitable site. The first one wasn't.

I would say to take a high-priced program like AutoCad. Provide entry-level videos to new users. Companies that use AutoCad could use your site to get new people up to speed. Charge an annual subscription to the company: maybe $500 a year for up to five subscribers at a time. On the forums, get answers posted within 24 hours. Show solutions in videos. Use Amazon's S3 to do this, not YouTube, unless you use YouTube as your recruiting device.

The average company has no interest in supporting this. Specialize in one high-priced program. Niche yourself.

INHERITANCE

I am a die-hard, cash only/no debt, independent, (very) small business owner. At 60 yrs old, and not planning to retire, I want to see my grandkids launched in the right direction: covenant succession is becoming my #1 goal. I started saving about 10 years ago, so I would be able to leave them some financial means to advance God's kingdom farther than I have. I have about $300k in business assets and $150k in cash and precious metals. Now that interest rates are low, and gov't wants to inflate away, should I borrow now and repay with devalued money later? Or would that be an admission that today's god trumps my God? I would only consider this debt for a real estate purchase.

Buy real estate that your grandkids will manage. Teach them how to buy it, get renters, and maintain it. This will be more valuable that the money value of the properties you leave them.

Debt is OK if you know what you are doing.

Start here: www.JohnSchaub.com.

SAVINGS BOND

I was born in 1988 and my aunt invested about $5000 in savings bonds around that time for me. Is there anything I should be worried about with those? Is there anything down the road that will prevent me from collecting my money?

Sell the bonds. Buy gold coins. The bonds are tied to the dollar. The dollar will decline.

CAREER

Your age: 44
Your location: central New Mexico
Your occupation: residential real estate appraiser
Your retirement date: 20 years??
Your #1 goal in life: enjoy life with my kids and future grandkids on my small farm

The residential appraisal industry is in trouble due to the Attorney General of New York, lender greed, and a host of other things. I love what I do, but am scared it's not going to survive. I love economics, but no clue what kind of career I could secure with an econ degree if I finished college. Might also enjoy natural healing/healthcare. I'd become a real estate investor/landlord/rehabber in a heartbeat if I had enough seed money.

First, you don't need accreditation by anyone to get rich in real estate. John Schaub, Peter Fortunato, and Jack Miller (R.I.P.) became very rich without any accreditation. Peter told me, "My biggest mistake was to waste four years in college when I should have been buying houses."

At your age, certification is way too late. That's for teenagers. You don't have enough time to go back to school to learn real estate.