Q&A with Carmen: Start Saving For Your Picture Perfect Retirement

Carmen Wong Ulrich
Carmen Wong Ulrich

By Carmen Wong Ulrich

Question:I am 62, she is 59, We have more out go the in come. We have 3 homes w/ payoption loans, rental in Hawaii, rental in Bakersfield, CA and our home in Thousand Oaks which is to big for us and too expensive to maintain. We each work full time and make a fair living. I have several credit card accounts at low interest till paid off. We are going to sell the rentals. We know we need to sell our home and downsize, We have no savings. We are living off the equity from the main home. There will be no profit from the rentals. We have lost our equity there. We owe $320K on Hawaii, We owe $280K on Bakersfield. Our residence is worth a $1m, we ow $800K. Our expenses are $3K more each month then we make.

Dan & Susan

Answer: Dan and Susan – You're so close to retirement and your funds are so tied up in real estate (Diversify, everyone, diversify!) that you need to put the pedal to the metal. Every month that you hold onto those properties, including the home you live in, you're getting $3,000 plus in the hole (you're not investing it and making a return either). You not only need to sell those rental properties as quickly as you can but you need to sell your Thousand Oaks home as fast as possible and downsize. Hopefully, you'll be able to pocket some of that $200,000 equity you have there to set aside and invest while you readjust your finances to fit comfortably within what you make and what you spend. If you can do this, and then continue to save as much as possible every month, you can have enough in 10 years to buy another, smaller, less expensive home and a decent nest egg. Consider your starting pistol fired—go!