First Person: I’m Done Investing in Stocks for My Retirement

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I stopped buying individual stocks, but I'm still making financial preparations for my retirement in 2040. According to some experts, investors need to save at least 15 percent of their income for retirement. Instead of buying risky stocks, I'm finding other ways to spend our retirement savings every month. A recent USA Today article claimed that people who doesn't save for retirement will experience a 72 percent decline in their standard of living in retirement. I think I can avoid a decline in my standard of living without having to depend on the stock market, which can't guarantee me of a return on my money.

Retiring in my home

A recent article by USA Today claims Americans are in for an unpleasant retirement even though there has been a rebound in home prices. I'm not worried about whether the value of my home rises in the next 25 years. I'm just focused on pay off my mortgage so I don't have to spend $700 a month on my mortgage loan in addition to the taxes and insurance. I rather put my retirement savings toward paying down my mortgage each month because it will give me a place to live when I'm older.

Letting my money grow

Although I'm not buying any new stocks or exchange-traded funds, I am going to let the money I have sitting in ETFs and mutual funds continue to grow over the next 25 years. According to the USA Today story, 57 percent of households have less than $25,000 in investments and retirement savings. Another 28 percent have less than $1,000. We are allowing the $100,000 in our retirement accounts to grow. By keeping our hands off, we won't have to pay all the trading fees. We won't make the mistake of timing the market or selling at a loss.

Investing in real estate

In addition to paying off my own home, I'm putting money aside to invest in rental properties. By the time I retire, I plan to have two rental properties that produce steady income for us. We intend to owe nothing on the mortgages. After collecting the rent payments and paying the taxes and insurance on the rental properties, we should net $1,200 a month or the average amount most individuals receive in monthly Social Security benefits. I also view the rental properties as being valuable assets to leave to my heirs.

After watching the value of my 401(k) shrink by more than 30 percent and losing tens of thousands of dollars by investing in stocks in the past decade, I'm ready for a different approach. I am tired of hearing the praises of the stock market. Investing in real estate and reducing my expenses decades in advance seems like a better plan for my retirement in 2040. If the real estate trends change, I can always sell one of my three real estate properties and live on the cash.

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More from this contributor:

How I Recovered after Losing $100,000

Planning for a Simple Retirement

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