How Real Estate Agents Can Plan For Retirement



Real estate agents tend to assume that next year will be even better than this one. Next year they will earn more. Next year they will begin saving. Next year they will start getting serious about retirement. Next thing you know, the time is here, and you feel like you don’t have a plan.

Here are some of the most common questions real estate agents ask about retirement:

What are my options for retirement plans?

Experts suggest that you should try to save at least 10% of your annual income – 20% if you are younger and have fewer financial responsibilities. The hard part is figuring out what to do with that money to get the best return on your investment. Here are some of the options you could consider:

Solo 401K – A solo 401k retirement plan allows self-employed individuals such as real estate brokers to contribute up to $61,000 per year. You can even take out a loan against 50% of your retirement savings if you experience hardship.

Simple IRA – If you set up a small business, the SIMPLE IRA may be right for you. This would allow you to offer your employees and yourself a retirement plan option. There are some drawbacks to this program, so be sure to consult a financial advisor before you begin.

Roth IRA – Roth IRA’s allow you to deposit savings post-tax. This means that you will have already paid the taxes upfront when the time comes to withdraw your funds for retirement. Taxes now, no taxes later. You can contribute up to $5,500 per year to a Roth IRA.

Traditional IRA – The Traditional IRA is the most popular plan, offering annual contributions up to $5,500 just like the Roth IRA, but without the income limits. If you’re over the age of 50, you can make catch-up contributions as well.

As always, consult a certified financial consultant for the very best guidance for your situation. The tax environment changes frequently, so working with a professional is the best way to keep you in the know about important regulatory changes.

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How can my brokerage pay me even after I sell it?

When you think about your business’s assets, remember that it is more than just a brand and a sign over the door. Your “little black book”, in this case, your client base, has enormous potential value. Don’t leave all those potential earnings on the table.

Some brokers leaving the business arrange to transfer their client list to a colleague in exchange for a referral fee. In such an arrangement, current clients are encouraged to work with this new colleague, and for every deal closed within the first twelve months, you receive a percentage of the sale.

In this way, your client list can continue to pay you for months or years after you retire. It’s all in the deal you make.

How can I create leverage?

Create leverage for yourself by treating your work as a business. Establish yourself as a sole-proprietorship, LLC, S-Corp – whatever works for you. Treating your work as a business, complete with a budget and savings plan, will give you the following benefits:

  • Designating a tax-status for your business gives you more options for retirement savings and tax deductions
  • Creating a budget and sticking to it will make you more financially secure and resilient
  • Establishing a separation between your work and personal life makes it easier to disentangle those things when you retire

What about investment properties?

“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.” – Franklin D. Roosevelt

Real estate agents are uniquely positioned to make supplemental income by way of investment properties. First of all, you know a good deal when you see one. You have a trained eye for spotting problems (or opportunities) other investors may miss. It’s not something that’s taught when getting your real estate license, but it has to be learned through experience in the industry.

Secondly, you know what sells. That makes you a perfect candidate for flipping a home that needs a bit of rehab. You see a home come on the market, evaluate it for neighborhood, curb appeal, and potential, and make an offer. Carefully budgeted renovations can make for a quick sale and profit.

Finally, you could also choose to keep your investment property for rental income. As a real estate agent, you speak the language of real estate contracts. Renting out your investment properties is a great way to have the tenant pay the mortgage while your net worth grows. A carefully selected portfolio of properties can yield you a very comfortable retirement income.


How can I stop working at all?pexels-gustavo-fring-4173195

“Retirement is wonderful if you have two essentials: much to live on and much to live for.” – Unknown

Being able to stop working and retire is the ultimate goal for most people. You will need to set yourself up with enough ongoing income to afford the life you want without working. It’s as easy and complicated as that.

The key to setting yourself up for retirement is to do more than just put money in a 401k or savings account. Set yourself up with a portfolio of investment properties with potential for the future. Treat your client list as an asset and leave no commissions on the table.

By diversifying your investments early in life, you set yourself up for a secure financial future. Don’t wait. Start today.

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Written By: Devin Doherty 

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About the Author

Chris Heller brings 27 years of experience in real estate. Chris serves on the AgentAdvice Editorial Board and is the Chief Real Estate Officer at OJO Labs. Chris brings deep expertise having held influential industry positions including CEO of mellohome and former CEO of Keller Williams Realty International.

Last Updated: 12/9/2021