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Outliving Your Money

Outliving Your Money

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It’s worse than you think. “The odds of running out of money in retirement are significantly greater than prior studies had concluded,” according to a recent Market Watch article.

This concern was identified by Edward McQuarrie, professor emeritus at Santa Clara University in his research that looked at historic periods in which U.S. retirees struggled to maintain their standard of living. What year was the worst? No, it wasn’t during the ’29 or ’87 market crashes, or the Great Recession of 2008. It was 1965 because “both the stock and bond markets embarked on a sustained period of negative inflation-adjusted returns.” Thus, he concluded that today’s retirees are in danger of outliving their money.

But he also identified a few ways to reduce the odds.

One suggestion that caught my attention (of course) was the addition of residential real estate to a retiree’s/near retiree’s portfolio. He added that historical data is limited, but he concluded that “the addition of real estate … was generally successful” adding that for investors outside the U.S. it was “sometimes remarkably so.”

According to the article, McQuarrie indicated that the key is how the real estate holdings perform. And that’s where Lloyd Jones comes in. As an owner/operator, we are proactive in the management and asset management of our real estate assets. Our investors know that through our intense underwriting and hands-on management, our investment track record of investor returns is outstanding.

Recently, we have adjusted our approach. For the past ten years, the play has been value-add multifamily real estate. We acquired apartment communities, upgraded them, enjoyed the income – and really enjoyed the appreciation. But now we are selling because caps rates are falling to crazy levels. With yields about five to six percent, it’s time to look at new opportunities.

And there are opportunities – fabulous opportunities to provide you added income in your retirement.

1) Senior housing. The past few years with Covid have devasted the industry with low occupancies and rising labor costs. But there has been virtually no new product. And now, we are recovering, and the demand has surpassed supply – radically. And there has been no construction to meet the current demand. And within the next five years, the tsunami of baby boomers requiring assisted living will be upon us. Then what? (The oldest baby boomers turned 75 last year; entrance to senior housing begins at about 80.) Even with a massive expansion of construction activity, there will still be a supply shortage. It’s time to invest in senior housing. You can expect to earn a yield of approximately 8%.

2) The other opportunity we are excited about is the hotel industry -another victim of Covid. We are focusing on extended-stay opportunities. In the right location, and with the right oversight, they will yield about 10% annually. Sometimes, they can be converted to senior housing (and in a lot less time than it takes to build from the ground up). Lloyd Jones has created a new hotel acquisition division to aggressively analyze investment opportunities.

We invite you to join us as we take advantage of this very timely- and exciting – opportunity.

Visit lloydjonesllc.com for current investment opportunities.