7 financial strategies for retirement success

Real estate agents help clients make good investments, but sometimes don’t plan for their financial futures. With life expectancies rising, many could outlive their retirement savings accounts. About half of all real estate brokers and sales agents were self-employed in 2014, according to the Bureau of Labor Statistics, making them particularly vulnerable because they have no company-sponsored retirement plans.

Victoria Gillespie, senior vice president and national director of business development for the Realtors Federal Credit Union, shared money management wisdom during a session at the National Association of Realtors conference in Orlando, Fla.

In Inman.com’s coverage of the event, writer Amber Taufen wrote about Gillespie’s seven retirement strategies for creating your retirement plan.

Have a budget and use it. Realtors often work from paycheck to paycheck, without understanding what they need to make to meet expenses. They might know their big expenses, such as car and mortgage payments. But fewer realize what they really spend each month, factoring in everything—down to that daily coffee, according to Gillespie.
Create a business plan and use it. An agent’s market can’t be everyone. Agents should Identify and define their specific markets to help them better spend their business-development and marketing dollars. In the long run, creating a business plan and using it will save time and money.
Identify and tap centers of influence. These referral sources can include accountants, estate- planning attorneys and others in the financial planning field. The idea is to give first; receive later. Gillespie recommended agents offer their centers of influence a valuable service, such as a free comparative market analysis. Do a good job and set a good example to earn that person’s trust and subsequent referrals.
Think about and be accountable to your numbers. Real estate agents need to plan because hoping they’ll have the money for what they want without knowing what they’ll earn can mean financial trouble. Gillespie said agents should be able to answer specific questions, including how many properties they’ll list, how many they will sell, and what the average sales price will be. They should also figure out how much income they’ll need to cover expenses, and which expenses have a high return on investment. Gillespie recommended putting aside up to a quarter of every commission check for taxes.
Business and personal finances should be separate. Those who blend personal and business accounts can increase the risk of getting audited. Gillespie suggested that agents work with a real estate specific CPA, to get expert guidance about how best to legally maximize deductions and pay the right amount in taxes.
Save for your future. Agents should save in a manner that fits how much risk they want to take. Putting money in a savings account earns little interest—usually not even enough to match annual inflation. But the money is generally safe. In the stock market, the risk is higher, but so are the potential rewards. Agents should hire a professional to help with managing investments and meet retirement goals.
Create your estate plan. Estate plans include important legal documents, such as a will, durable power of attorney, and medical directives (to define medical wishes in one is unable to communicate). Agents should hire a professional to create these documents for peace of mind that their wishes will be handled correctly.