if you were fighting a war and had a tank…

…would you use it…

…or would you keep it away from the battle? 

Maybe the rest of your arsenal would be strong enough on its own to win the war?

Now… if you would keep it in reserve for a time…

You’d be slugging out a long war.

Totally unpleasant.

Potentially fatal.

The military would call this a tactical error…

The tank is a part of the arsenal and should be deployed as a part of a larger strategy.

Why am I talking about Tanks and Battles?


It’s just like not using your home in your retirement strategy.

Home equity is about 2/3rds of Boomers’ assets.

Most Boomers refuse to deploy it in their retirement strategy.



Most home equity is just “dead money” – kept to the side while we slug it out in the battle to achieve a victorious retirement.

In life I would call that a tactical error…

Common Sense:

You may be thinking:

“My home is the safety boat.

 It’s a sacred investment. Only used as a last resort.” 

You dreamt of living through old age with no mortgage payment.  Tapping the equity might jeopardize that security, right?

Here’s a wild question:

What if you could “re-deploy” some of that equity?

And do it without the fear of making a mortgage payment or reducing your current equity?

And, let’s imagine you could yield an extra 34% in income from your nest egg?

First though… I’ll tell you a secret…

Even those of us who think we have saved enough probably haven’t.

Let’s look at the numbers.

More than 50% of Boomers have Zero Nest Egg


A study released last year by the Government Accountability Office (GAO) gave more detail than any other source I’ve found about the financial situation of today’s retired population.

Specifically, the GAO provided details on people ages 65 to 74.

52% of households in this group have absolutely no retirement savings whatsoever.

That’s not to say that they don’t have any assets or income:

  • 77% own their homes
  • 36% have paid off their mortgages
  • 49% have some sort of defined benefit (i.e.. pension plan)
  • Almost all receive some sort of Social Security payment

What about the other 48% who do have savings?

It’s a mixed bag.

The median household among this group has $148,000 saved — enough to provide about $6,000 a year in income to those following the 4% rule.

But they also have a median net worth of almost $600,000.

95% own their homes (and 51% have paid it off), and 58% have some sort of defined benefit plan. And again, the vast majority also collect Social Security.

Here’s the shocker:

Only the top 12% of all retirees in this age rangecan count on a minimum of $16,000 in income each year from their nest eggs.

Now, add in pensions, Social Security and other common sources, and their incomes could easily add up to more than $35,000 per year.

That’s an amount you could manage on if you own your home outright.

Just barely though.

After taxes, insurance, maintenance and day to day living expenses, $35k a year is far less than would make life comfortable.

Let’s break down the source of income for the two groups:

The GAO offered an even clearer visualization as to how where the money’s coming from to allow these groups to afford their respective lifestyles.

The answer: It certainly isn’t coming from their nest eggs…


Social security provides a huge portion of retirement income.

Overall, it provides a whopping 44% of all income for those aged 65 to 74.

Even among those who have built up their nest eggs, that savings provides just 9% of their retirement income.

How to add $12,000 to your current $35,000 income:


You might think that I’m suggesting you take out a reverse mortgage to play the stock market.

That would be stupid.


Playing the stocks is like going to Rick’s American Café and Casino.

While most of us are being entertained out front the real action is in the back room (and we’re not invited).

The suckers listen to the piano player pay the bills while the exclusive few in the back win in a rigged game… (think Captain Louis Renault).

I like simple solutions…

I don’t know about you…

… but whenever I listen to a certified financial planner they lose me as soon as they start talking about “investment goals”, “tolerance to risk” and returns that are calculated based on being in a “40% tax bracket.”

  1. My investment goals are to make as much money as possible (how do you like them apples?)
  2. I’m 60 years old. My risk tolerance is zero.
  3. I don’t know a single person who pays 40% on their taxes.

These questions are just lame, right?

Who’s going to say that my goal is to have an income of $10,000 per month in my retirement – so don’t show me anything that would result in $15,000???

Or that my risk tolerance is that I have no tolerance so that leaves only government bonds earning 1.2% as an option.

Real Estate was your best investment years ago and it still is:



Investing in real estate has what Warren Buffet calls “intrinsic value.” That means its value is more than just the thing that you see – it’s also what it does or what it provides.

People will always need a place to live.

For many of the younger generation buying that living space is now out of reach so they have no choice but to rent.  Providing that rental space can be a great source of passive income as long as it’s done right.

Here are several rules that I follow in my personal investment strategy:

  1. Always target the middle to lower end of the economic scale when thinking about whom to rent your property to. This group will be long term tenants since they will never save enough money to buy a house and usually pay rent on time.
  1. The rule of thumb for purchase price verses monthly rent is a 1% factor. In other words, if a 3 bedroom condo will rent for $1,700 per month you can pay $170,000.  I’ll show you why in the example below.
  1. Always pay cash. In the example below I’ll show you what my own property is making and will continue making as long as rents stay where they are now.  However, what happens if the economy tanks and I need to lower rent?  Since the property is owned no debt I could slash the rents and wait for the market to come back without the risk of losing the property to foreclosure.  That’s why a reverse mortgage is so important.  It will allow you to turn your current equity into cash without a mortgage payment.  That cash is what is used to purchase the investment property of cash.
    1. Fix everything to new condition when you buy a property and never worry about the usual ongoing service problem that we all hear about. In the example property (which was a total re-hab) everything that could break or cause a problem later was replaced before it was placed on the rental market.  I hate problem calls don’t you?


  1. Hire a good real estate firm to find, screen draw up the lease for your tenant. There is a saying in the legal profession that an attorney who represents themselves in court has a fool for a client.  The same thing can be said for a property owner that leases their own property.  Having a bad tenant can be a nightmare and it’s too easy to be played by a good con artist.  People who lease properties for a living are very good at identifying and screening these cons out.  Don’t skip this step because it will cost you in the long run.

Now let’s take a look at a real example:



This is a property that I own.

As you can see, the total investment was $170,000 resulting in an income stream of just a little over $1000 per month or a 7.1% return on my investment.

I point this out just to show you that I’m not making this stuff up as a hypothetical like most of the other sites that you might look at.

Instead, I’ll show you the real deal….

So let’s tie this all together:

At the beginning of this article I suggest that your home can increase your monthly income by 34%.

Since the average retirement income is about $35,000 per year if you could increase your income to $47,000 that would be a 34% increase in the cash in your pocket.  If you own a home that’s valued at between $300,000 and $350,000 and it’s paid for you could conceivably liberate $170,000 of that equity from a reverse mortgage without adding a mortgage.

But wait a minute.

How does this not reduce your equity?

Doesn’t the reverse mortgage reduce the equity in your home because the mortgage is growing?

Consider that you just added an additional property that will also grow in equity. This will offset the reduction.

The bottom line is that this scenario can put an additional $1000 per month in your pocket.

What kind of difference would that make in your retirement life?


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