Do you know how much you need on hand to retire? Agent Lorraine Beato shares a cautionary tale about preparing now so that you are not selling homes well into your golden years to stay afloat.
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It’s been the wildest market many real estate agents have ever seen. It’s been hot and raining money on real estate agents these past two years with the growing demand for homes and lack of inventory.
However, for many, it’s also been crazy trying to get buyers under contract in multiple offer situations, creating a lot of burnout and stress for buyer’s agents as well as listing agents often having to help sellers sort through 40-plus offers.
Many are working way more, spending more time driving around showing homes and gas prices keep going up. Now the market is shifting in many cities across the country, and some real estate agents are starting to panic a bit.
Why is it that successful real estate agents make great money, but the minute things shift, many start to panic? Especially some of those agents getting closer to their golden years.
One thing is for sure: As self-employed independent contractors, there is no guaranteed, company-sponsored 401k or retirement plan. If you are a real estate professional or know someone in real estate, you must be well aware that retirement planning and savings are a big problem in this industry.
Most Realtors have lumpy income, which is irregular and often makes it difficult to save. There are multiple reasons why real estate agents fail to plan properly for their retirement leading to a disastrous ending of a shining career.
Real estate agents are bombarded with hundreds of things to spend money on – CRMs, marketing materials, websites, coaching, buying leads and social media marketing just to name a few.
However, when was the last time you saw someone showing real estate professionals how to invest, how to save, and how to set up their retirement accounts which in some cases can also help them lower or defer taxes?
Could this be why real estate agents don’t retire? Have you ever attended a retirement party for a real estate professional?
Poor planning is par
Depending on where you’re planning to retire, you may need more than $1 million to maintain an average lifestyle. Some 64 percent of Americans think they’ll keep working after a traditional retirement age, with 7 percent saying they’ll probably never be able to stop working.
While many real estate agents are passionate about what they do, their retirement planning lacks the creativity and attention required. Most real estate agents also lack knowledge regarding other investments.
Their lack of time and education about planning for retirement makes them unaware of some great retirement plans like a Roth IRA, a traditional IRA, a solo 401k or even how to invest in the thing they sell every day! After all, most of the wealthiest people in the United States got there through real estate investing.
Why plan now?
Since the start of 2022, housing prices have soared, with prices jumping each month. According to the National Association of Realtors, median home prices reached a record high of $413,800 in June 2022.
While the median price fell to $389,500 in August, this number is still 8 percent higher than the previous year. This confirms that with the low inventory and high buyer demand in the last few years, real estate agents were earning more than before. As prices escalated, so did commission checks.
It was the perfect time to start putting some of the checks away to plan for a shifting market and to be able to retire at some point in time. It’s time that real estate agents flip the switch, learn how to invest in their craft, and start thinking about their future and their legacy.
The most successful real estate agents are those who have invested in real estate, saved for their retirement and broadened their knowledge of other assets to invest in.
If you want to retire at some point and don’t plan on being a real estate agent till the day you die, then it’s time you start planning and saving for your retirement.
Lorraine Beato is the CEO of Atlanta’s Residences powered by eXp Realty. Connect with her on Facebook or Instagram.