Turning Your Real Estate Business Into Your Retirement

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Presentation to real estate investors and landlords on ways to diversify into other income-producing investments and prepare for retirement

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  • Disadvantages: Less than max contributions Eligibility can increase total cost to employer Immediate vesting Creditor protection not as great as ERISA plans Contributions usually flat percentage
  • Turning Your Real Estate Business Into Your Retirement

    1. 1. Turning Your Real Estate Business Into Your Retirement Paycheck Using Real Estate to Fund Retirement Steve Stanganelli, CFP®, CRPC ® Fee-Only Financial Planner Amesbury & Wilmington 978-388-0020 / 978-621-8268 www.ClearViewWealthAdvisors.com
    2. 2. Agenda <ul><li>Turning Real Estate Cash Flow Into a Retirement Paycheck </li></ul><ul><li>Ways to Diversify with Other Income-Producing Investments </li></ul><ul><li>A Walk Through the Alphabet Soup of Retirement Plans: </li></ul><ul><ul><li>• Self-Directed IRAs </li></ul></ul><ul><ul><li>• 401(k) Plans </li></ul></ul><ul><ul><li>• SEP and SIMPLE IRAs for Your Business </li></ul></ul><ul><ul><li>• Traditional versus ROTH IRAs </li></ul></ul>Steve Stanganelli/Clear View Wealth Advisors, 978-388-0020
    3. 3. Getting Paid to Retire <ul><li>Become a Mailbox Landlord </li></ul><ul><ul><li>REITs and TICs </li></ul></ul><ul><li>Sponsor a Retirement Plan </li></ul><ul><ul><li>Simplified Employee Pension (SEP) </li></ul></ul><ul><ul><li>Savings Incentive Match Plans for Employees (SIMPLE) </li></ul></ul><ul><ul><li>401(k) </li></ul></ul><ul><li>Sell & Exchange </li></ul>Steve Stanganelli/Clear View Wealth Advisors, 978-388-0020
    4. 4. Getting Paid to Retire: REITs & TICs <ul><li>REIT: Real Estate Investment Trust </li></ul><ul><ul><li>Entities invest in other real estate assets from apartment buildings to shopping malls </li></ul></ul><ul><ul><li>Consider an Exchange Traded Fund </li></ul></ul><ul><ul><ul><li>DJ Equity All REIT Index (DJR) </li></ul></ul></ul><ul><ul><ul><li>DJ Composite All REIT Index (RCI) </li></ul></ul></ul><ul><ul><li>Fundamentals Improved </li></ul></ul><ul><ul><ul><li>Last year many raised funds </li></ul></ul></ul><ul><ul><ul><li>Housing crisis favors apartments in the near term </li></ul></ul></ul><ul><ul><ul><li>Retail and Health have continued pressure </li></ul></ul></ul>Steve Stanganelli/Clear View Wealth Advisors, 978-388-0020
    5. 5. Getting Paid to Retire: Sell & Exchange <ul><li>1031 Exchanges </li></ul><ul><ul><li>Trade Up or Trade Into Passive Investment </li></ul></ul><ul><ul><li>Defer Taxes at Time of Transfer </li></ul></ul><ul><ul><li>Watch Out for the Boot!!! </li></ul></ul><ul><ul><li>Watch Out for “Constructive Receipt” </li></ul></ul><ul><ul><li>45-Day Replacement Property Identification Period </li></ul></ul><ul><ul><li>180-Day Transaction Completion </li></ul></ul>Steve Stanganelli/Clear View Wealth Advisors, 978-388-0020
    6. 6. ABCs of Retirement: Sponsoring a Plan <ul><li>Simplified Employee Pension (SEP): </li></ul><ul><li>25% of Compensation Up to $49K in 2010 </li></ul><ul><ul><li>Not a Pension or Qualified Plan Covered by ERISA </li></ul></ul><ul><ul><li>Established by Business on Behalf of Employee </li></ul></ul><ul><ul><li>Contributions Go to IRA of the Employee </li></ul></ul><ul><ul><li>Contributions Tax Deductible to Employer </li></ul></ul><ul><ul><li>Higher Contribution Limits than IRA </li></ul></ul><ul><ul><li>Easy to Administer, Establish with No Reporting </li></ul></ul><ul><ul><li>Flexible Contributions </li></ul></ul><ul><ul><li>No Employer Responsibility with Investments </li></ul></ul><ul><ul><li>Post-Year Funding (Employer’s Tax Return Due Date) </li></ul></ul>Steve Stanganelli/Clear View Wealth Advisors, 978-388-0020
    7. 7. ABCs of Retirement: Sponsoring a Plan (#2) <ul><li>Savings Incentive Match Plans for Employees (SIMPLE) </li></ul><ul><ul><li>Set Up is Simple but … </li></ul></ul><ul><ul><li>Includes Employee Deferral (max $11,500) plus Employer Match </li></ul></ul><ul><ul><li>Advantages: </li></ul></ul><ul><ul><ul><li>Employer contributions are tax deductible </li></ul></ul></ul><ul><ul><ul><li>Save on Payroll Taxes </li></ul></ul></ul><ul><ul><li>Disadvantages: </li></ul></ul><ul><ul><ul><li>Set Up Deadline (October 1) </li></ul></ul></ul><ul><ul><ul><li>Employees Fully Vested </li></ul></ul></ul><ul><ul><ul><li>2-Year Probation Period (Steep excise assessed for early terminations </li></ul></ul></ul>Steve Stanganelli/Clear View Wealth Advisors, 978-388-0020
    8. 8. ABCs of Retirement: Sponsoring a Plan (#3) <ul><li>401(k) + Profit Sharing </li></ul><ul><ul><li>Combines two plans </li></ul></ul><ul><ul><li>Funded with Employee Deferrals, Employer Match and Optional Profit Sharing and Forfeitures (for unvested portions) </li></ul></ul><ul><ul><li>Options for Small Employers: “Solo” or “Uni-k” </li></ul></ul><ul><ul><ul><li>Can also extend to spouse </li></ul></ul></ul><ul><ul><li>Coordinate Limits with Any Other Employer-Sponsored Plans </li></ul></ul>Steve Stanganelli/Clear View Wealth Advisors, 978-388-0020
    9. 9. Diversify <ul><li>Add Income through Diversification </li></ul><ul><li>Consider the Value of Dividends in Retirement </li></ul><ul><ul><li>Go Beyond Fixed Income and Add Equities </li></ul></ul><ul><ul><ul><li>Receive Current Income (Yield) PLUS Possible Growth as an Added Inflation Hedge </li></ul></ul></ul><ul><ul><ul><li>High-Quality Dividend-Paying Stocks – Go Global </li></ul></ul></ul><ul><ul><ul><li>Master Limited Partnerships (MLPs) </li></ul></ul></ul><ul><ul><ul><li>Real Estate Investment Trusts (REITs) </li></ul></ul></ul>Steve Stanganelli/Clear View Wealth Advisors, 978-388-0020
    10. 10. Diversify: Income in Retirement Steve Stanganelli/Clear View Wealth Advisors, 978-388-0020 “ Dividend Aristocrats” Index versus S&P 500 Index * Dividends Reinvested. Past performance does not guarantee future results. . Data from January 1, 1990 through September 30, 2009, annualized. Dividend Aristocrats Index S & P 500 Index Income Return 3.09% 2.30% Price Appreciation Return 7.88% 6.11% TOTAL RETURN 10.97%* 8.41%* Annualized Total Return Dividend Aristocrats S & P 500 Index 1990 – 1994 12.58% 10.40% 1995 – 1999 19.48% 28.54% 2000 – 2004 9.74% -2.29% 2005 – 2009 * 2.32% -0.80% 1990 – 2009 * 10.97% 8.41%

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