The 70s Could Be Your Golden Years In More Ways Than One
So you’ve retired. The end of the earning road, right? No way, say financial experts who have studied the issue. More than one fortune was built by people who had passed the 70-year milestone. Later-life entrepreneurship actually has some benefits that might not have worked earlier, they say.
A Bankrate.com article by Chris Kissell suggests that, with a little effort and sacrifice, there is money to be made by people who have some experience behind them. No need to give up that dream of spending the time you have left in comfort.
The suggestions advanced by the experts include:
Making small investments while you are in your prime working years may give you a nice little nest egg. But if that opportunity passed you by, it isn’t too late. Invest as much as you possibly can every month and hope for good results. According to James Twining of Financial Plan in Bellingham, Wash., a 70-year-old retiree who could invest $2,393 per month, at an annually compounded rate of 10 percent a year could end up with a million dollars by age 85. The equity markets have been returning an average of 10 percent per year since 1926, he notes. He warns against the temptation to gamble on high-stakes stocks, a strategy that actually can defeat your success ratio.
Start a Business
Creating your own business is one of the historically successful ways to increase your worth. Older first-timers actually have some advantages over younger entrepreneurs, says William Carrington, founder of Arrington Financial Planning in Arlington, Va. He is convinced it is the best route to financial security. Those in the retiree camp have a lifetime of experience on which to draw and have generally developed expertise in at least one line of endeavor. His advice is to explore that expertise and see how it could translate into a viable company. In the process, it may be possible to spread the wealth by hiring other older (often that translates to more reliable) retirees, many of whom are willing to work for less than young folk.
Delay Social Security
The longer you wait to collect Social Security, the larger the monthly payment. It is one of the most stable sources of income for the elderly. According to Barry Korb, president of Lighthouse Financial Planning in Potomac, Md., a couple who hold off on collecting their SS until age 70 could end up with a comfortable amount — up to a million dollars— that would be a great investment fund if carefully handled. He posits that a couple, both age 66 and entitled to maximum SS payments, could realize a 32 percent increase in their payments, about $845 per month each or $1,690 for the two. Invested, say, in a Standard & Poor’s 500 index fund, which averages a 7.84 percent return after taxes over the years, they would be millionaires by the time they were 92. That doesn’t take into account SS increases, which would add to the total.
Buy Real Estate
This avenue to wealth requires significant risk, but is a proved method for getting rich quickly. The best return — and the greatest risk — comes from using leverage. For instance, if you purchased a $500,000 property with a 20 percent down payment, and if there is a 5 percent appreciation in the first year, the increase for you is $25,000. That’s good, but again, the experts point to the risk and advise caution.
Forget About Making a Million
Aside from the bragging rights in having accomplished what for many is a lifelong goal, what’s the point? Given the inevitability of decline and death, is it worth the effort? For some, it would be, especially if their objective is focused on the well-being of dependents. However, people like Twining who deal with financial issues for a living, think a drive to accumulate huge amounts of money in the twilight years is wasted effort. “Get-rich schemes very rarely work,” he says. “Somebody who is 70 or older would be foolish to give it a try.”
In other words, it’s possible, but . . .