This question is for anyone who considers themselves officially retired from the day job AND is using rental income as their primary source of income to fund their retirement years.

Now, if rental income funds your current retirement, how important is it to be diversified in other types of non-RE investments? If the economy goes south and the stock market crashes,...can you depend on rental income to keep you happy when during tough times?

We bought our apartment building as a way of keeping the same proportion of our portfolio in RE instead of being 100% in the stock market. We are debt free, and live simply in a low cost area. I will be retiring in November. Unless I buy a race horse or a yatch, Social Security and rental income will easily cover our day to day expenses. Withdrawal from 401K, an as needed basis, will cover cruises and Mr. Landlord conventions.

When I was young and wanted "things", there was never enough money. Now that I am older, it takes very little to make myself content.

Hiya Roy!

Retired at 41. Now been retired longer than I worked, all from rental income.

Debt is the FREEDOM!!! killer-the need for income to keep up with the debt. Eliminating debt reduces the income needed. A handful of debt free rentals can support a respectable lifestyle.

Rentals give me cash flow which is spendable for daily living . Wall Street is not usually a cash producer.

Stocks and market values go up and down but rents continue (with minor adjustments).

Landlording does not have an age limit.

Your recent experience shows it can continue with minimal personal input when you have a helper.

Just as aside. Remember with a 401K at 70 1/2 the government makes a guess how long you will live and mandates what you must take out or pay a penalty.

He is fully retired from day jobs since 2012, and me even longer. More money now than when we worked.

We were completely out of the market after the crash of 200(7?) I couldn't take it. But then our fathers both died and then my mother and we inherited a bit of stock and pretty much left it alone, except to pull some out to buy more houses now and again.

We've lived off our rentals completely since 2006. We owe NOBODY NUTTIN. Completely debt-free.

Next month, we will both get our first (of many, I hope!) Social Security checks. Honestly, I don't know what we'll do with the money-but I'm sure we'll find a way to deal with it!

We also have some individual stocks, bonds, and mutual funds, plus IRA money-and to be honest, our "problem" is different-barring a complete collapse of the countries' monetary system , our only problem is how to lower our taxes-once we hit 70 1/2, we'll have to start drawing down our IRA money-THAT will be a huge tax hit.

Toying with the idea of converting it all to a Roth. But I don't trust the government not to change the rules!

Homer(TX) - For whatever reason, if you were going to put all of your eggs in one basket,...can I assume rental properties would be your first choice?

Brad20K- You mentioned the debt issue. How important is it that you get all of your debt paid off (including your primary residence) by the time your first S.S. check arrives?

WMH - I got out of the stock market at about the same time you did,...it rattled my nerves too.

Susan (OH)

We were working with a financial adviser in 2007...supposedly a good one (expensive too.) He subsequently left the business completely.

We had a few others in the past. I still have the expensive life plan booklet one put together for us...hahahahahah!

I think the reason financial advisors know/tell folks NOTHING about r.e. is because, despite what the IRS tells you, it is NOT passive income. You sure can't "set it and forget it".

And as someone else said, "if it was easy, everyone would be doing it" It is NOT easy...hard to get the courage to start, hard to keep on when it isn't going well, lots of times-it is just plain hard. Most folks do not like HARD.

As an aside, my cuz just contacted me to ask about some financial/Social Security stuff. (same age as I am-63)He is an engineer, owns his own biz, but it was startling to see how little he understood about finances! He told me, "I like engineering stuff-never was interested in financial stuff".

40 plus years ago, my hubby was laughed @ b/c of where he worked, compared to some of his friends who were working @ the automaking/sweeper/roller bearing factories-he was getting lower pay and a "profit-sharing" plan-that sometimes only added $400 a year to his retirement! That was when we saw the writing on the wall and said we need to find a way to fund our retirement-hence, the real estate.

(His company did in later years, start a 401-K plan-he ALWAYS put the max in, each and every year).

Unless one turns over 100% of the management and all operations of their rental property, they aren't really "retired" Most of the commenters on this board use their rental real estate as both an investment and a job (some part time, some full time.) Those who say they are retired while putting in hours per week running their rentals, whether it be scrubbing toilets or negotiating million dollar deals are not really retired. They may not have a boss that can give them orders day to day, but if their business requires their frequent input, they are not as "free" as they think they are.

Real investments require only minimal management. Think a couple of hours a week at the most.

The trouble with most of them is you need money to make money with them, your sweat equitiy doesn't count for much, and margin investing aside, no one wants to loan you money to make investments. You have to get it first.

Few of the 99% ers need a financial advisor, and almost never can they justify their fees in exchange for a higher return.

Keep your investments simple. Ideally, if you have the funds, a good mix is:

One year's expenses in a stable investment, like bank account, money market, etc. These pay 1% or less currently, but will not "tank"

Of the rest of bulk of your retirement assets, divide it 50:50 with an index fund that tracks the S and P 500 or the total market; and an intermediate treasury bond fund.

Buy these only from a no frill brokerage house like Vanguard, FIdelity, or Schwab. Ideally, keep your expenses low...on the funds 0.1% for the S and P and 0.5% for the bonds. Stay out of any hand-holding brokerage/advisor shops like Edward Jones, Merrill Lynch, etc. They will take many tens of thousands of dollars over the years out of a million dollar portfolio.

For 90% of the 99%ers this is all they need to do. Also, never invest in anything more fancy than this. Those that confidently tell you to invest in the stock of a single company like "my Apple shares have done well since I bought them back in '88" are BDing you. Many middle class dreams have been shattered by invesitning in single stocks or sectors, like gold, China, biotech. Just stay away from them. If you get shares of company stock in your retirement account, sell them as soon as you can without taking a penalty.

Some of us just have to fiddle with sh** all the time (me included) or we get bored. The object of that lesson is to have the "fiddle money" investments be not so terrible or large that they sink the rest of the investment ship. A couple of thoughts...

Real estate has a low "beta" that means it is unlikely to follow the stock markets ups and downs. That is good of course. Other low beta strategies include hard money lending, peer to peer lending, buying tax notes, etc.

To sum it up, if you can be fortunate to have even a year's living expenses in a stable investment, you almost surely can ride out any stock market dumps, because you can live on the inome from the stable investments first, the bonds second, the alternative investments third, and by then the stock market has bounced back. Easy peasy.

JR (ME)-good advise.R U one of the 1%?

According to the chart I looked @ on Fisher Investments, my hubby and I are-or are danged close. We *could* turn over all our real estate to a property manager.Wouldn't make it so we are unable to live on our rentals. Just haven't yet-if you've been around this forum for a while, most folks think 99% of all property managers are not worth their keep. Blood-suckers who do a lousy job.

Just my 2 cents.

DH is eligible for SS, me not for a couple of years. He wants to hold off taking it, I want to take it now on the off chance we get hit by a bus while waiting for the "huge" increases...

You need to fund retirement out of what you have. So, where to look for retire funding is dependent on what you can do to generate income from what you have, and thus, the question is, how to take what you have and generate profit from it. Strangely enough, thats what most of us have been doing for years, but now the details are a little more critical.

Generating income the same way that you have already been doing it is attractive, because you think that you know how to do it. If so, that’s good advice: stick to what you know.

Most “financial advisors” are at most Jr. College graduates, on the same level as insurance salesmen. The good ones know the product that they are selling, but are not really competent in the wider sphere of making good money from what you have. Its not as if they were trained at one of the good graduate schools of business to be financial analysts.

There is more money to be made in the stock market, in today’s environment, then there is in Real Estate. BUT, you have to know what you are doing, or the ones who do know will go home with your money. Thus, sticking with what you know, is the best advice for those who don’t want to learn.

The stock market ISN’T going to crash. It might CORRECT (actually it WILL correct, and regularly) and those occurrences are predictable and their effects are manageable. If you want to cook in this kitchen, then you must learn how that works. Even a crash is recoverable, but retirees can’t wait too long. Even the cyclical boom-and-bust cycles are manageable.

Market-based products sure CAN produce cash flow. There are dividends, distributions and gains. The best strategy is to draw out a regular stipend from portfolio to use, while investing the remaining portfolio to get gains that will restore the draw-down, if you can.

It may seem that stocks and market values go up & down, but they actually go up & down within a trading range, and, if properly invested, will not go down outside of that range. So again, you have to know what you are doing and stick to what you know. If you make a mistake, then take your loss and move on.

Self-confidence is also important. The slings and arrows of outrageous fortune aren’t for those who can’t take it. Medical bills alone can eat up grand profits. The purpose of investing is to make your life better, so if you can’t sleep, why be in the market?

One day of trading shouldn’t wipe you out. If you are worried about that, don’t get in. Stick to what you know,

Remember that most “financial advisors” work for a company and are told what products to sell and what arguments to use. Big brokerage houses provide research to the salesman, and everyone is selling the same products to you and to the next guy. Very few (usually independent) advisors understand enough to really tailor a portfolio to individual needs. If they did, they wouldn’t have to take a job as a salesman.

The times are also important. Now happens to be a once-in-a-generation opportunity for growth in the US. Housing is and will benefit from it, but not like other opportunities.

Index funds can be useful, but they don’t gain more than the index. They have only one advantage, and that’s why Warren Buffet advises their use for simpletons. They will also crash, if the market crashes, correct whenever the market corrects, and be equally unresponsive to a weak economy.

On the other hand, real estate investments are highly dependent on the individual market in which they are located. Obviously, they have more value in a vigorous market area than in a complacent one. And those situations change, with time. After all, a market is a market.

Thanks JR in ME for that detailed answer.

Most doctors that I know seem to be poor business people. How did you get so smart beyond a stethoscope?

Roy, I'm surprised Google didn't hit in on the original Rathdrum in Co.Down.close to Holywood where McIllroy hales from.Your Southern Drawl would really stand out over there.Doubt you could get anything in the price Range you normally do,so right away you have two strikes against you! Just saying.Aye, surly!!.

David - I've been doing the same rough calculations - not as detailed I'm sure as your spread sheet but on notebook paper. Isn't it a great way to plan the rest of your life ... "guess when I'm going to die".

Re: eggs, from Andrew Carnegie:

While I love RE as an investment, I would advise against putting all eggs in one basket.

Today rents are healthy and RE demand is healthy. In my area, the houses I bought in 2011-2012 have appreciated significantly.

If you woke up tomorrow and your news feed informed you of some financial collapse that dropped RE prices by 50% and rents by 33%, would you still want to be all in on RE?

A bit in RE, a bit in stocks, a bit in J.O.B for me cause the other 2 aren't enough to cover everything.

Predicting the future is crazy, so once in awhile I suggest you play devil's advocate and think about what happens should your investment strategy go sideways.

Property management is an active sport to do it right.

I feel more comfortable about rental income than I do about the stick market. Everyone on earth need: shelter, air, water and food......we don't need shares of Microsoft to survive.

I agree with Ray-N-PA. Everyone needs a place to live. Yes, if the rental market drops 33% we can still survive. Because we are debt-free. I'd have to dial back the Amazon Prime purchases a bit but I guess I could live without 2-day shipping on laundry detergent and I still haven't figured out what to do with my Echo Dot ;)

Roy, btw, real estate has been our income before, during and after the 2008 recession. We paid full boat college tuitions

and throughout 2008 and the aftermath NEVER lowered rents and never had any vacancy for longer than normal.