How Can Real Estate Investments Help with My Retirement Planning?

Posted May 6, 2022

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Planning for your financial future is important, even in post-retirement. Real estate investment can help those seeking to boost retirement income and increase wealth assets.

Discover how investing in real estate can help you with retirement planning, particularly through diversifying your portfolio with a Delaware Statutory Trust (DST) investment or using a 1031 exchange.


Real Estate Investments and Retirement Planning

When you begin planning for your retirement, some of the objectives might be earning a passive income and growing your post-retirement wealth. Investing in real estate can boost your monthly income through rental income.

Owning an investment property can also pay off in the long term when you sell the property for a lump sum profit. You can invest these proceeds into additional properties or a trust fund to leave behind as a financial legacy for your loved ones.

You may consider investing in a property before retirement, especially if you require borrowed funds to purchase the property. Alternatively, you can use funding from your Individual Retirement Account (IRA) or Roth IRA post-retirement to invest in real estate.

Real Estate Investments for Retirement Planning

When considering a real estate investment as part of your retirement plan, you’ll want to explore several factors to ensure you make a suitable financial decision.

First, pay attention to the property’s location rather than the price. A piece of real estate in an excellent location may bring you a higher return on investment than a cheap property in a non-desirable area. Second, we believe you should seek a property with projected profits of at least 8% year over year in an effort to ensure the property is worth the investment. Aiming for at least 8% profit is designed to protect you against risks associated with owning real estate property like late rent payments and necessary repairs. It may also help you against the illiquidity of real estate as an investment.

Next, consider the type of property investment. While purchasing a single-family rental property as a sole owner can bring in passive income during your retirement, it also requires a host of additional responsibilities and expenses related to tenant management and property upkeep.

To maintain a rental property, you must manage the property yourself or pay a property management company. You must also pay upkeep expenses for the property and keep and enforce legally sound rental agreements. These responsibilities may detract from your enjoyment of retirement, so look into alternative options such as a DST, which offers a passive way to manage the property as the daily responsibilities are handled by a Sponsor.

A DST is a type of real estate investment that can provide a passive income for retirees. The benefit of investing in a DST is that you can claim direct ownership with the IRS without managing and maintaining the property on your own. This allowance lets you transfer existing investment property proceeds into a DST using a 1031 exchange.

A 1031 exchange lets you defer capital gains tax on the sale of your real estate investment and roll the proceeds over into like-kind property. Post-retirement, these factors can help you continue building wealth without paying taxes on the funds each time you make an additional real estate investment.

DSTs also offer retirees the ability to invest in commercial investments that are difficult to acquire without a pool of investors. You can work with a qualified broker specializing in real estate investing and DSTs to explore your potential investment options before and after retirement.

Investing in a DST is designed to provide a passive income, which can benefit you in retirement planning and wealth-building in the future.


This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation. Diversification does not guarantee a profit or protect against a loss in a declining market.  It is a method used to help manage investment risk. No public market currently exists and one may never exist. DST programs are speculative and suitable only for Accredited Investors who do not anticipate a need for liquidity or can afford to lose their entire investment. There is no guarantee that the investment objectives of any particular program will be achieved. The actual amount and timing of distributions paid by programs is not guaranteed and may vary. There is no guarantee that investors will receive distributions or a return of their capital. These programs can give no assurance that it will be able to pay or maintain distributions, or that distributions will increase over time. Costs associated with a 1031 transaction may impact investor’s returns and may outweigh the tax benefits. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities. Programs that depend on tenants for their revenue may suffer adverse consequences as a result of any financial difficulties, bankruptcy or insolvency of their tenants. All real estate investments have the potential to lose value during the life of the investment.

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