At Last! A Realistic Retirement Outlook From Major Media

My monthly Schwab statements include a financial newsletter. I usually toss these in the trash after scanning them because, quite frankly, they don't have much information that I don't already know. However, the April issue pleasantly surprised me. Although it still doesn't have much info that is new to me, it does feature an article that caught my eye titled "Five Retirement Myths To Ignore." What struck me was that this is the first article I've seen from a major financial source or major media source that states what I feel to be the major problems with current retirement advice. It's about time someone started telling it like it is. Below are their five myths. They commented on each one in the article, but I'll just give you my comments.

1. You'll only need 70% to 80% of your pre-retirement income. Health care expenses are going through the roof and, once retired, it's a good bet you will no longer be covered by employer health insurance. This alone is enough reason to ignore this advice. If you plan to travel more or buy nicer things, you'll definitely need more than 80% of your old income. Personally, I want my standard of living to rise when I retire, not stay the same or go down, so I plan to make more during retirement.
   
2. You'll be in a lower tax bracket. Federal deficits are going through the roof. At some point, taxes will have to be raised. And remember that withdrawals from traditional IRAs and 401(k)s are taxed as ordinary income - the most heavily taxed income there is. Thank goodness for the Roth IRA!
   
3. You'll keep working. Who thinks this? Retirement means you are no longer working!
4. The stock market will save you. By the time you retire, you will not have a long enough time horizon to ride out market fluctuations.
5. There's always Social Security. Haha!! Yeah, right!

Schwab Annouces Global Real Estate Mutual Fund

My monthly Schwab statement included a newsletter that featured an announcement about a new mutual fund Schwab is starting. It's called the Schwab Global Real Estate Fund and it will invest in REITs and REOCs (real estate operating companies). The initial subscription period is May 1, 2007 through May 30, 2007 and the initial price is $10.00 per share, with a $2,500 minimum ($1,000 minimum for retirement accounts and $100 minimum for custodian accounts). More information can be found here. The expenses are 1.36%, but they have agreed to limit them to 1.20% through 6/30/09.

As always, this is not a solicitation to buy or sell any security. Do your own due diligence.

Rental #1 Refi Update

On Saturday, I got an email from my escrow agent regarding the refi of Rental #1. It was the Quit Claim deed transferring the title from my LLC to my wife and I personally. This needs to be done because the lender will not mortgage to an LLC. As soon as the mortgage is recorded, I'll transfer the title back to the LLC. I again reminded the escrow agent that I plan to do this. She said no problem. I need to watch this, because I just know it's a step that will be forgotten.

Anyway, I had the Quit Claim notarized today and dropped it in the mail. I haven't heard if the appraisal of the property has finally been done or not. Last week, my mortgage broker called and asked for the name and contact number for the tenant, so he could schedule the appraisal. The number I had turned out to be out of service, which must have happened recently since it was a working number a while ago. I gave the broker the names of the other people living there in case he wanted to try to look up their numbers. I also gave him the phone number and name of my property manager. He said he would put the appraiser in touch with the property manager and let them work it out.

Spoke With Property Manager

I got a call this morning from my property manager. She said she was following up and wanted to make sure I got my rent check. Well, it's a bit late to be returning the voicemail I left over a week ago, but at least she did return the call. I told her I got the check on the 24th and that I know she said her accounting department was running behind last month, but I hoped it wasn't always going to be that late. She said the checks normally go out between the 10th and the 15th, but agreed that the 24th was a bit late. Then she added "...although it was only 10 days late." I pointed out that 10 days is a third of a month! She said "Yes." and then there was silence. I think she got the picture that I didn't think 10 days late was acceptable.

The request for a rent increase for Rental #2 was submitted to Section 8. We're going to see if we can get $460 a month for it, up from $439. There are some repairs that need to be done to the property (paid for by the seller) and Section 8 needs to reinspect it to make sure it still qualifies for the Section 8 program. Some of the repairs had to be delayed because the tenant didn't pay her water bill and water was shut off. The property manager told her she needed to pay the bill or she would be evicted. The bill was paid by the next day. Once the repairs are done and the property has been reapproved for Section 8, we should be able to close escrow. We were originally scheduled to close at the end of this month, but that may get pushed back, depending on the Section 8 work.