| 401 Condo Retirement Concept | | | | that this could never happen in American or any |
| Almost everyone needs to take saving for their | | | | civilized society. The real question about having a plan |
| retirement seriously. Regardless of where you live in | | | | like this should be: What can you do with this assets |
| the world, having a savings strategy for your | | | | throughout your working years? |
| retirement income should be a priority throughout | | | | Now on the other hand, supposed you found a |
| your working years. Most of us have seen the | | | | condo on the beach or in the mountains somewhere |
| illustrations showing how drastic the results are if you | | | | that you loved to go. Suppose that the address is |
| start saving early. In fact, the earlier you start | | | | 401. What if you bought this condo for $400,000 and |
| funding a retirement savings account, the less you | | | | mortgaged it for 30 years. Your payments would |
| actually need to put in each month. | | | | amount to about what you would fund into a |
| Typically, a worker or business owner will fund | | | | retirement plan. If it still exists, you might be able to |
| retirement savings through a plan that is coupled with | | | | write off the interest on the mortgage as a second |
| some sort of tax advantage. At least this is what | | | | home. If you don't use the deduction, you might be |
| you are told by the people who should know better. | | | | able to rent the condo when you are not using it. |
| The idea is that you can save taxes today and pay | | | | You would have a place to spend all of your |
| lower taxes when you retire. Well, unless you plan to | | | | vacations with the family, creating some fond |
| retire broke, this is a very poor decision because of | | | | memories for all of your working years. Be sure to |
| several key issues. First of all, taxes in the future will | | | | take a lot of pictures of those good times. |
| most likely be at a higher rate, regardless of what | | | | When you are ready to retire, you'd have some |
| part of the world you live in. Secondly, this thought | | | | decisions to make. Should we downsize from our |
| of having a lower income is not true. If you're | | | | home to our condo on the beach or in the mountains |
| healthy, you will probably spend more money | | | | or simply sell the condo. With any appreciation of the |
| traveling or doing hobbies that could require the same | | | | real estate value, you'd realize a substantial gain on |
| income you had during working years. If you are not | | | | the sale. As the tax laws are today, you would not |
| healthy, the cost of medical care will demand you | | | | have to worry about paying any capital gains taxes |
| have a higher income. | | | | on the sale of either the condo or the primary house. |
| So, you sign up for the retirement plan that allows a | | | | This means that all of your proceeds from the sale |
| tax deduction today and defers the taxes until you | | | | would be tax free and available for an investment to |
| take the money out of the account. All of the | | | | create an income stream in retirement. |
| growth is added to your deposits along the way and | | | | Instead of having an income that would be 100% |
| you hope to accumulate a nice pile of money to | | | | taxable (unless you saved some in an after-tax |
| provide a retirement income. All through your working | | | | ROTH account), you'd see a nice break in your taxes |
| years, this money is pretty much off limits to you | | | | in retirement. The condo provided many fond family |
| until age 59 ½ or older. Some provisions might exist | | | | memories during your working years and could really |
| for a loan, but read the fine print on this, you'll be | | | | make a difference in your lifestyle in your retirement |
| required to pay it back before leaving your | | | | years. The enjoyment of having a place to vacation |
| employment or face a penalty on top of the taxes. | | | | and spend time with the family will most likely provide |
| What would be another way to describe this | | | | better memories in retirement than those statements |
| account? "Loan me this money now and I'll pay you | | | | from a retirement plan. |
| back at a later date. And by the way, I will tell you | | | | This is not a new concept and not meant to totally |
| the interest rate which I'm willing to pay when you | | | | replace your retirement savings. The value of most |
| get your money at that later date." | | | | people's home is much less than most people will |
| Would you take that deal? NO! Then why are so | | | | need to retire on. However, it is a concept that |
| many people falling for this retirement plan game? If | | | | everyone should think about as they struggle with |
| you stop to think about it, that's what a 401k or IRA | | | | the stress of raising a family and working to make |
| plan is. You are putting money into a plan with your | | | | ends meet. The condo idea won't work for |
| most valuable money (today's value) and hope that it | | | | everyone, but for many, this is an alternative to think |
| grows over time to provide an amount which you will | | | | about. Since people spend more time planning their |
| take out at a future date with an unknown amount | | | | vacations compared to their retirement, maybe |
| of taxes taken out. This is the logical explanation | | | | having a retirement plan that provides vacations |
| without even discussing that the government could | | | | during your working years is for you. |
| seize the assets for wealth re-distribution. We trust | | | | |