Ashley:
Most people spend 40 years working so they can stop working, but what if you could build a life where work is optional way before 65?
Tony:
Ashley and I are pulling back the curtain today on our actual retirement plans, what we’re doing, why we’re doing it, and what we wish we would’ve known sooner because no one handed us a roadmap. And if you’re a real estate investor trying to figure this out on your own, well then this episode is for you.
Ashley:
This is the Real Estate Rookie Podcast. I’m Ashley Kehr.
Tony:
And I’m Tony J. Robinson.
Ashley:
So I have actually put together a list of questions for Tony and I to actually go through to share our own journey saving for retirement. And hopefully this will help a lot of you be able to plan for your own retirement. So Tony, the first thing I kind of want to go over is the beginning. When were we first introduced to retirement? And I think for me, it was when I graduated college and I started my first job and I got a 401k with that first job.
Tony:
Yeah, I think same for me. And I’ll just add context for the entire audience that between me and Ashley, Ashley’s definitely the resident retirement expert between the two of us and she educates me on a lot of these things. But yeah, I think it was for me too. When I graduated college, actually my first job after college did not offer a 401k and that job did not last very long, but my first real big boy job after college I think was a few months afterwards. And yeah, I got a 401k and I had to sit there with my other coworkers who were recent college grads and were trying to figure out, okay, how do we put these percentages there and what does this mean? But yeah, it was a first job after college with the 401.
Ashley:
Yeah, my first job only lasted six months, my accounting job before I quit and went into property management. But from that first job, I had very little vested. So a lot of times a 401k, you have to work there for so many years before they’ll actually give you the employer contribution of it. So it was very little. And when I left there, I ended up rolling it over into a Roth IRA. Still really didn’t know a lot about retirement at all. It was actually a friend that told me and helped me go through that. I didn’t really know a lot about it. And I actually had a financial advisor then. So after I had left that job, the new investor I started working for, the property management company had a financial planner. I was like, “This is probably a good idea for me. ” And I went to him and all I had was my little money.
Honestly, it was probably like $500. I don’t remember. But it rolled over into that. And then we just did some financial planning of what to do for the future. And I probably had the financial advisor for maybe five years. One thing he did do for us was set up 529 plans for the kids, which we’ll talk about that more later. But other than that, I really didn’t use the financial planner at all. I think it was like $700 to $1,000 just to meet with him and go over stuff and definitely was not worth the money. And then my second job, I didn’t even get any benefits at first. I worked there for several years. I was part-time. I worked whenever I wanted. And it actually came to a point where I asked for benefits and I got health insurance and then I got 401. And I believe it was a 3% match and I had to contribute 3% for them to give me that match, which is pretty common.
So Tony, do you remember at Tesla at all when you would, did they have a match at all?
Tony:
Yeah. So Tesla was slightly different, but I’ll go back to that first job. I actually worked for Target before working at Tesla and Target did have a match. I don’t remember what it was. It was so many years ago at this point, but I remember I just invested up to that match, whatever the match was, that’s what I invested up to. So I maxed it out there and I can’t remember what it was, but that’s what I did at Target.
Ashley:
So kind of our next investment for retirement, which we really probably didn’t think of it at the time, but was purchasing our rental properties, my long-term properties and your short-term rentals. So Tony, at the time that you were going to ignore your long-term rentals because you sold them, but your short-term rentals, when you were purchasing those, did you have anything in your mind thinking about this, I will use these properties for retirement? In any sense, were you thinking about that down the road?
Tony:
I mean, that was really the main reason that I got into real estate was because my dad growing up always said, “Unless you want to get up and go to a job every single day until you’re much, much older, you’ve got to have some assets that pay you on a regular basis.” And he’s like, “Real estate’s one of the best ways to do that. ” So that was just drilled into me very, very early on. So I don’t know if I thought about it as retirement, but for me, it was just always having that financial freedom, I guess, more so. And that’s what pulled me into real estate to begin with.
Ashley:
Yeah, that was definitely my framing and thinking too, but it was more like now. How can these assets give me the financial freedom now as in retired? But we all know landlording, short-term rental operations, a lot of that isn’t a quiet retirement sailing off into the sunset. There’s still a lot of work to do, but I never thought about what… I knew I wanted to hold properties long-term, but I never actually saw what mortgage pay down appreciation and an increase in rental income every year can actually do to just be a ton of equity by the time I’m 65. Hopefully a ton of equity before that. I have to say that it probably took me about eight years before I actually really started strategizing what properties I was keeping and which ones I was selling to think about later on in life. So I wanted to think about which properties would have a lot of appreciation where I would have options with them.
Where before, when I first started investing, it was a cashflow play. I didn’t care if they appreciated, I just wanted cashflow. Well, some of those properties were like $20,000 duplexes, but they cash flowed a lot, but they were headache properties. They were in areas that saw no appreciation. I was super, super lucky where I bought them at the right time and I sold them just after COVID when prices went crazy. And so I was able to sell them and get rid of them at a good time. But even if I would’ve held onto them for a long time, the appreciation just wouldn’t be what it was for other areas where I went for higher dollar amount properties in better areas, better school districts and things like that. So as I’ve started to weed out my portfolio, I put a lot of thought into down the road in the future.
I want salable assets that I have a easy exit strategy. They’ll have a lot of equity built up into them and I can tap into that at any time that I need to. Tony, what about you? Have you kind of changed or pivoted your strategy at all thinking more about the future when you’re ready to just retire?
Tony:
Not necessarily. I mean, I think we’ve been fortunate enough that I think the long-term prospects of all the markets we’ve invested into, we’ll probably continue to see pretty good appreciation, like a good chunk of our portfolios in California, which typically does pretty well. So I don’t know if we have anything that we’ve purchased where I question it’s the long-term viability in the portfolio. There are some properties that are just like headaches for other reasons, but I truly think if I hold all these properties for 30 years, we’ll probably be in a pretty good position in terms of loan paydown and appreciation.
Ashley:
We’re going to take a short break, but when we come back, we’re actually going to go through the retirement stack. And this is from Scott Trench from BiggerPockets Money. And this is going to tell you multiple options of what you can do for retirement and his recommended order of how to invest in these things. So we’ll be right back. Okay, welcome back. So we got into a little bit about Tony and I’s real estate for retirement, but we also want to talk on other investment vehicles that you can do for retirement because it is important to diversify and there are a lot of advantages to using some of these other retirement vehicles. I was listening to a podcast the other day with Scott Trench and Mindy Jensen on BiggerPockets of Money, and Scott went through and put together his retirement contribution order of operations. So this was for specifically a high-income W-2 household, but really I think this would work for any W-2 income household.
And if you are self-employed, you’re not going to get an employer 401k match, but you could still go through these orders of operations in some sense, but obviously you’re not going to be able to have access to all of them. But also there will be other options for you too because you are self-employed and don’t have a 401 employer option available to you. Okay, so the first one is take your employer 401 match because this is in a sense free money, but I mean technically it’s worked into your compensation package, but you should take it. Don’t leave it on the table because that’s money lost. So sometimes you don’t have to contribute, you just automatically get the match from your employer. So that’s even better. But that is step number one is to take that.
Tony:
Step number two, and this is the one that literally changed my life, but it’s the employee stock purchase program or ESPP where companies allow you to buy stock at a discounted rate. So again, I spent the majority of my W-2 career working at Tesla and I was very fortunate that during that time the company did incredibly well in the stock market. And we were able to purchase from every paycheck that would take out however much you wanted to allocate, but you could buy Tesla shares at a 15% discount. So just imagine the amount of wealth you’re able to build of every single paycheck. I think we were paid biweekly. So it was at 26 times a year I was able to go out and buy Tesla stock at a 15% discount while the stock was also increasing at this pretty rapid pace. And gosh, I want to say I might be confusing the bonuses with the employee stock purchase, but I want to say that there was a fixed price that you would be able to buy it for the quarter.
So even if it went up a little bit, you still even got maybe a bigger discount. But either way, for me, that’s where I put the majority. I think I was just putting in to match at Tesla as well for the 401k. Actually, I don’t even know if Tesla offered a match. I really can’t remember because I know most of my money was going into ESPP because that’s where I saw the biggest opportunity. But guys, when I lost that job, it was all of that stock that I’ve been piling into for years and years at that point that allowed us to have the foundation to build our portfolio and go full-time into real estate. So truly one of the best returns that I’ve ever had on any investment.
Ashley:
Yeah, I’ve never worked anywhere that had that as an option. So the next one, step three is to max out your HSA. So I believe not everyone can actually get an HSA. You usually have to be in a high deductible plan, but with the HSA, you’ve put in pre-tax money and it gross tax-free. And if you use it for medical, it’s tax-free when you pull that money out too. So it’s like a triple tax advantage. So this is great to save as you get older. You may have more medical expenses in your elderly age and you’ll have all this money to pull out tax-free to be able to use. Also, even now as you have medical things that come up, but to pay your deductible for your high deductible plan and other medical bills that you may have that you can use that money for.
But that’s a huge advantage because it’s like a triple savings on taxes right
Tony:
There. And 7.4 is to max out your dependent care FSA. I’ve actually never used this before and I’ve had kids almost my entire life now at this point and I’ve never used this. Are you using a dependent care FSA at all, Ash, or have you used one in the past?
Ashley:
No, I’m not. So it’s like a pre-tax employer sponsored. So again, if you have a W-2 job and your employer has to offer this, but it’s used to pay for childcare expenses.
Tony:
My brother-in-law works for a global tire distribution company and they offer an FSA and that’s how he pays for his babysitters through that account or for his nanny through that account. So just a good way to save on taxes on something you’re going to spend money on anyway.
Ashley:
Okay. So step five is to max your 401 contributions. So as of 2025, if anyone’s still filing those tax returns for 2025, the max contributions you could do is up to 23,500. So this is pre-tax contributions. And I mean that’s a lot of money for a lot of people to be able to put $23,500 after you’ve already contributed to a lot of these other things too. So this would be just maxing out your 401k.
Tony:
Ash, I’ll let you take maybe six and seven just because I feel like I can’t speak confidently to the IRAs.
Ashley:
Okay. Then the next thing is the Roth IRA. But this is if you are a high net come earner, you’re not eligible for an IRA. So for single head of household, you have to be $153,000 or under. You can’t make more than that. If you’re married filing jointly, it has to be under $242,000 to be able to contribute into the Roth IRA. The Roth IRA is where you contribute after tax income and then your money grows tax-free. One thing I really like about the Roth IRA is that really at any time, unless you’re using an employer sponsored plan, they may not allow this, but if you just go to Vanguard, Fidelity, open your own account, what you contribute, you can pull out at any time tax-free and penalty-free because you already paid taxes on that money when you put it in there. So you want a down payment for a property and you have the money that you’ve contributed over the years in a Roth IRA, so you’ve contributed $50,000, maybe it’s grown to 70,000, you could pull out 50,000 of that and use it for a down payment on a rental property.
So that’s what I like about the Roth IRA is you can still access that money without having to pay any penalties or fees. If you do make over that amount of money and aren’t eligible for a Roth IRA, there is something called a backdoor Roth IRA. And first of all, I’m going to urge you to go over and listen to this episode of BiggerPockets Money. It was with Amanda Hahn, who’s a CPA, who talks about the benefits of how you could actually do a Roth IRA. But basically what you do is you’d contribute to a traditional IRA and then convert it immediately into a Roth IRA. And the limitation for 2026 for a Roth IRA is $7,500 that you’re able to contribute to it. Okay, then you can even take it a step further and do a mega to a Roth IRA. And once again, you have to check that your plan administrator allows this, but if you can make after tax contributions to your 401k, so it’s like a Roth 401k, then you can contribute it up to 72,000.
But then remember, this is a combined limit with what you’ve already put in, but then you can go ahead and convert that into a Roth IRA. And Amanda Hahn had said on this episode as to this is all legal, but it’s like the IRS, they always just make you jump through a hoop to get something done. It’s not like you can just easily go ahead and go into a Roth IRA. You have to do these hoops to be able to access this tax benefit. But talk to your CPA, talk to your financial advisor if these are options for you.
Tony:
And then the final step, step number eight here is the 529 college savings plan. And again, I’m 35. My son is 18, so it’s like more than half my life I’ve been a parent, but I didn’t even know about this when he was born. And now that we’ve got younger kids again, this might be something we end up using. But effectively, this allows you to take money after tax money. So you’ve already paid taxes on it. You can put this into this 529 plan and it grows and all of that growth is tax-free as long as it’s used for educational purposes. So sending your kid to college, to trade school, to apprenticeship program, something to that effect. And actually, I don’t know, Ash, do you know if there’s contribution limits on the 529?
Ashley:
It’s basically like a gift tax. So it’s 19,000 but 38,000 for married couples without having to report a gift tax.
Tony:
I mean, that’s a meaningful amount. If you’re doing that, you can send your kid to a very, very expensive school if you continue to do that over the course of their lifetime. So if you’ve got young kids, it is a great tool to allow you to set money aside and let it grow that you can then use for college.
Ashley:
So New York State, you can deduct if you’re individual up to 5,000. And if you’re married, you can deduct up to $10,000. So if that makes a big difference on your income tax return, but that’s another benefit depending on what state you’re in, it could reduce some of your reported income on your taxes for the state tax return. Another benefit of the 529 plan is I believe it’s 36,000 of that can actually convert into a retirement plan. So it actually convert into an IRA. So if the kids don’t use it for school, then you can actually save that money for their retirement and then they can pull it out when they’re at retirement age and they don’t have to use it for school. But there is a limitation, a cap on how much money can be used for that. But also the 529 plan, it can be used for private school, for high school, even I believe elementary too.
So even if you have a kid going to private school right now, you could contribute to it just to get the New York State tax write off, then pay the school out of it to have that deduction. But you can pay for books. I had seen this post before where it was an accountant that posted it on social media where they had said what you should do is put all this money into the 529 plan and then when your kids go to college, you buy a house there and have your kids use the money out of the 529 plan to pay you rent. So it’s guaranteed rental payments. The money that you contributed is coming back to you. One thing that people totally missed in the comments, and I actually started kind of arguing with someone, which I never ever engaged with. And the person who posted it finally responded like, yes, you’re absolutely correct.
Is that just remember that’s not tax-free money. That still rental income coming back to you. So you’re still paying taxes on that, but not as much as you would’ve when you first earned that money from your W-2 job.
Tony:
And then you do something like a cost segregation setting, you get some bonus depreciation and you qualify for rep status and material participation and you can still write off all those earnings, hopefully.
Ashley:
Okay. We’re going to take a short break and we’ll be right back after this to tell you what our plans are for the future for our retirement. Okay, welcome back. Thank you guys so much for watching or listening. If you haven’t already, make sure you are subscribed to our YouTube channel at RealEstateRookie. Okay, so we went over some retirement options that you may have, a recommended order of operations from Scott Trench, but let’s get into what Tony and I are actually doing now with these retirement options that are available and what we see for ourself down the road. So Tony, what is currently happening right now? Are you contributing to any kind of retirement plan that’s available out there?
Tony:
I do have a retirement plan. Yeah. Not a lot is in there because I just started it recently. I’m very overly concentrated in real estate right now. I still do have a Tesla stock for my time working there, but obviously that’s just one entity. So there’s still some risk there. I think that’s part of the reason I love when we talk about this is because you remind me there’s a lot of other options out there, but I think I get so focused on what’s in front of me and like, hey, real estate is a thing that I know so well, but there’s a benefit to having a diversified portfolio. So I think for me, it’s looking into some of these other options and seeing how I can expand those things.
Ashley:
I think too, real estate is so addicting. It’s like, okay, over the course of the year, I could contribute this money to a retirement account or even a brokerage account or whatever, or I could go and buy another property or I can add an upgrade to my short-term rental to increase the revenue there. Think about how many pools you put in. Those could have been money funneled into a retirement account for you, but that is your retirement, these properties too.
Tony:
But I think diversification is good. And I talk with a lot of folks who are coming from the opposite end where all of their retirement is in the stock market and they’re like, “Hey, I just want to diversify and have something that’s a little bit more tangible. And I’ve got so much that’s tangible that I probably need a little bit more that’s in the market.” So got to balance it out a little bit.
Ashley:
Yeah, I’m contributing right now to retirement plans and I maxed out my contributions last year, but this year I’ve been not as much. I’ve definitely slowed down my contributions just because like you said, there’s other things I want to do in real estate right now. So definitely not contributing to the max and I don’t think I’ll max out this year at all. But another thing is the 529 plans I did that financial planner, I guess maybe he was worth the $1,000 because I did contribute to my kids’ 529 plans when they were very little. And I think my oldest was two or three and then the other ones basically have them since they were born. And I’m pretty sure I’ve put, I think it’s like $50 a month I put in each one of them. And when I started them, I probably put in a thousand to fund them or something like that each maybe.
But they each have 12 to $14,000 in them right now at the age of eight, nine, and 12. So that makes a big difference being able to start and then if they decide not to go to college, you can actually change the beneficiary on them too. So I am the owner of the 529 plans, but at any time I could change the beneficiary. So actually my sister, she’s going to school right now to be a PA. And my aunt had money left in a 529 plan and she changed the beneficiary to my sister so she could use the money to finish out school. So that was really awesome. I
Tony:
Didn’t know that that was one of the features of the 529. Yeah. Are you able to use it for, say that you have a kid that wants to go to, they want to become a surgeon, so they’ve got to go to regular undergrad, medical school, residency, all those other things. Can you use it across all those different stages or does it stop at a certain stage? Do you know?
Ashley:
I don’t think it does. I don’t know for sure, but I’m pretty sure you can use it for any education. And that makes me wonder too, if you were a real estate agent, could you use it for your CE classes? Things like that. I’m not sure on the specifics of that. But one thing I like about it too is you can go into your 529 plan and you can print off little vouchers and you give these out to grandparents and say, “Hey, they don’t need another toy to clutter their house. Here’s a voucher. You can mail in a check and this will go into their 529 plan.”
Tony:
That’ll get all the kids excited on Christmas morning.
Ashley:
I mean, not that it’s worked for me yet. I haven’t noticed any increase in any of their accounts. It wasn’t Ruby, but that is an option out there. And I’ve read too a lot of articles about grandparents starting them also for kids and then they’re being the owners of it and then the kids being the beneficiary, the grandkids. So yeah, Tony and I are really interested as to how you are diversifying your retirement, what options you have available. One thing that’s been really important to me this year is financial opportunity and that is having many different ways to access capital. So if I have a medical emergency, I have a Roth IRA I can withdraw from. I have an investment property I can sell. I have a store full of liquor that I can liquidate going out of business sale. So I think that’s the biggest thing for me is I want to have financial options, not only in retirement, but now in life too.
So it’s been intriguing to me to talk about all these different ways to build financial freedom alongside real estate because I do think it is really important to diversify. Well, thank you guys so much for joining us. I’m Ashley and he’s Tony and we’ll see you guys on the next episode of Real Estate Rookie.
Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here. Thanks! We really appreciate it!
