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Unlocking Real Estate Opportunities for University of Missouri Employees: A Guide to Building Wealth in Retirement

If you are a University of Missouri employee looking to buy real estate as a part of your retirement planning, then you should know that such an approach has its advantages and disadvantages,' says Michael Corgiat of The Retirement Group, a division of Wealth Enhancement Group.

Brent Wolf from The Retirement Group, a division of Wealth Enhancement Group advises University of Missouri employees who want to diversify their retirement portfolio with real estate to focus on due diligence and the local market dynamics.

In this article, we will discuss:

1. Diverse Retirement Investment Strategies: We compare the conventional stock market investments with the real estate options for retirees and emphasize the tangible benefits and the stability that comes with real estate.
2. Challenges and Benefits of Real Estate Investment for Retirement: We explore the possible drawbacks, such as problem tenants and repair costs, against the background of healthy rental yields and tax advantages.
3. Real Estate Retirement Stories: Real tales from four people over the age of 65 who have invested heavily in real estate, including their stories, approaches, and results.
While on Wall Street, many people save for their retirement, some of the University of Missouri employees may decide to own real estate, which is a more tangible asset, with a better curb appeal. Having kitchens, doors, and walls around their nest egg makes retirees more comfortable. These retirement investors like the property rental income and the tax benefits that come with being a landlord even though many still rely on the stock market to fund their retirement. Some of them also derive joy from the process of property rehabilitation.

The Boston College's Center for Retirement Research, in its analysis of Federal Reserve data, reported that in 2022, 10% of American homes belonged to an individual 65 years of age or older who received rental income, while just 7% of households with an individual under 65 years of age did the same. Managing properties is a job during retirement. Tenants may not pay or may cause damage, units may stay vacant, and repairs may be immediate. In addition, the costs of property ownership such as insurance and property taxes are also rising.

University of Missouri employees should take these into consideration when investing in real estate. Though there are such problems, there are still many retirees who believe that the advantages are greater than the disadvantages. Due to the years of increasing property values and relatively low mortgage rates, a large number of people are retiring on real estate today.

These four real estate retirees share their experiences, the expenses, the worries, and the pleasures of living off a portfolio of properties.

Josh Bottfeld: San Diego, California.

Properties: 7. Mortgage Debt: $1 million. Annual Spending: $120,000. Josh Bottfeld bought a San Diego studio apartment in 1982 using money he had taken out of his retirement account. At 29, he thought that this would provide retirement money from a portfolio. Several years later, he sold the studio and used the proceeds to buy a house in San Francisco, which he and a friend later sold for $125,000 after purchasing for $103,000.

From these earnings, a three-family home in a gentrifying neighborhood was purchased. By the year 2000, Bottfeld owned fifteen properties in Portland, Oregon, Las Vegas, and San Francisco. He was also able to take advantage of a tax loophole that deferred capital gains taxes while investing in another piece of real estate. In 1997, Bottfeld left his job in human resources to become a realtor.

In 2004, he moved to San Diego to run a real estate company and at 53 he retired after retiring from working and from investments and rentals. During the financial crisis, there was a need to return to work for a short time but in 2012, he retired for good. According to Bottfeld, real estate is a good inflation protector and therefore investment in it is better than in equities. He and his spouse, Brent Butler, currently own three rentals in a San Diego home and 14 units in seven buildings. Property managers receive between 6-10% of the rent to take care of the repair and tenant issues.

He has controlled his expenses, but his house equity is only $8 million after mortgages. His four properties are mortgaged and his fixed interest rates are about 3.5%. He has $4.8 million in equities and other interests including bridge loans that pay 8% to 15% to house flippers. He receives about $20,000 a month in rent, $8,000 a month in bridge loans, and $3,200 in Social Security. His lifestyle includes a Danube River cruise this summer at $10,000 per month in expenses.

Sarah McLane: Stowe, Vermont, and Nantucket, Massachusetts.

Properties: 2. Mortgage Debt: $0. Annual Spending: $100,000. Sarah McLane instead chose to build her fortune for retirement in historic homes in Nantucket and Stowe, Vermont while working on Wall Street. She quit her job in financial services in 2017 to become a builder in Vermont and stopped tracking the stock market. Instead, she focused on real estate, which she knew and could improve.

When McLane withdrew most of her $250,000 retirement funds in 2007 to use as a down payment and remodel an 1813 farmhouse in Stowe, she began her real estate career. She used the money for her house rather than withdraw it from her retirement account and pay the 10% early withdrawal penalty though she had to pay income tax on it. The Stowe property is worth $3 million and was purchased by McLane for $2 million. Her passion for establishing a permanent presence in an area she believes her kids would love drove her to peel off wallpaper and finish wood floors while spending her weekends. In 2018, she spent $1.6 million to purchase a historic Nantucket home and $2.5 million to renovate it to rent it out.

To rent out the Nantucket house during the busiest travel season, she intends to live in Vermont for the summer. She expects to generate $250,000 per year, which will be more than enough to cover her $100,000 in expenses. She also holds $1.3 million in bank accounts with 6% interest. During the winter, McLane plans to rent out her Stowe home and use the rental income to maintain it. She intends to live in Nantucket from fall to spring, claiming that it is the perfect place to retire and that he plans to live there. The house is ideal for her future as it is close to Boston and her grandson and has facilities nearby.

Augusta, Georgia / Bryan Haltermann.

Properties: 12 Mortgage Debt: $2 million Annual Spending: $150,000 Even two years after retiring, Haltermann still goes to the office every day to check on his holdings. The former developer of commercial real estate enjoys walking around his properties and talking to his four employees who manage his properties and responding to emails. Playing tennis on the court and having lunch with friends are his slow pace example. Four decades ago, Haltermann's business started when it paid approximately $50,000 for a 10,000 square foot facility that is currently valued at $500,000.

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He was well versed in historic properties and was able to restore them with significant tax benefits. He bought out his company partner about 15 years ago. After retirement, he invested the $5 million profit from the sale of ten buildings for about $10 million. An additional $5 million represents the value of his remaining rents, house, and vacation property, along with $2 million in low-rate mortgages. His insurance, taxes, and mortgage are all paid for by rental income.

He and his spouse, Alicia, are primarily spending on travel and are spending $150,000 a year, or $50,000 more than they did before retirement. Italy and Spain have been their recent favorite travel destinations. Due to the rising costs and interest rates, Haltermann has no plan to purchase any other real estate.

David Zach: California, Sierra Madre.

Properties: 4 Mortgage Debt: $850,000 Annual Spending: $66,000 David Zach didn't see the need for any other investments and put all of his retirement money into real estate. He preferred tangible and touchable assets. The majority of his assets are held by Zach, who is 63, and they are mostly centered on three lots in Sierra Madre: his house, a rental property nearby, and an auxiliary dwelling unit (ADU) that is currently being constructed. His current rents yield about $7,000 per month, and once the new ADU is finished, he expects to receive an additional $2,000. He is happy with his real estate investment of homes worth approximately $3.3 million and $850,000 low-rate mortgages.

Working about ten hours a month, he sells shower parts through his business and earns $84,000 a year. He spends about $5,500 a month on food, property taxes, and mortgage payments. He has invested all of his money in housing, and he has learned from the experiences. He lost a property to foreclosure 16 years ago, and he incurred $300,000 in losses.

He has kept a lean real estate portfolio, given that labor shortages and inflation have increased the cost of building an ADU to $100,000. Recently, when construction expense overruns forced him to preserve his older cars instead of ordering a new one. His two adult children will help to finance his retirement and inherit his rental properties. In his words, 'buy the worst property in the nicest neighborhood that you can afford.'

These anecdotes demonstrate that although investing in real estate is a work and risk that can produce a steady stream of income in retirement for University of Missouri employees. Every investor's journey is unique and reflects that of his or her circumstances and preferences in the path towards retirement financial security and satisfaction. Real estate investments for retirement offer University of Missouri retirees substantial tax benefits in addition to stable rental income.

The IRS explains that owners of rental properties may be able to lower their overall tax burden by claiming expenses such as property taxes, mortgage interest, depreciation, and repairs on their taxable income (IRS, 2023). This can be particularly helpful for people trying to reduce their tax liabilities and therefore increase their retirement wealth because it can generate a steadier and more reliable source of retirement income.

References:

1. Dalton, Michael J. Retirement Planning and Employee Benefits. 20th ed., Money Education, 2025. UCLA Extension. www.uclaextension.edu .

2. 'Real Estate Investing for Beginners: 5 Skills of Successful Investors.' Harvard Division of Continuing Education, 2023. professional.dce.harvard.edu.

3. 'Why ASPPA Number So Low and 2012 Budget Number So High?' Center for Retirement Research at Boston College, 2023. crr.bc.edu.

4. 'Retirement Planning Today.' Virginia Commonwealth University, School of Business, 2023. business.vcu.edu.

5. Grainger, Lauren. 'Retirement Planning Today Course Details.' Virginia Commonwealth University, 2023. connect.business.vcu.edu.

How does the eligibility criteria for the Defined Benefit Retirement Plan at the University of Missouri System differ for Level One and Level Two members, particularly in regard to their hire or rehire dates?

Eligibility Criteria for Level One and Level Two Members: Level One members are employees hired before October 1, 2012, or those rehired before October 1, 2019, who had earned a vested benefit but did not receive a lump sum. Level Two members are those hired or rehired between October 1, 2012, and October 1, 2019, without eligibility for Level One benefits. Employees hired after October 1, 2019, do not accrue service credit under the DB Plan(University of Missouri …).

In what ways do service credits accumulated at the University of Missouri System impact an employee's retirement benefits, and how can employees ensure that they effectively maximize their service credit over the years?

Impact of Service Credits on Retirement Benefits: Service credits are critical in calculating retirement benefits at the University of Missouri System. Employees accumulate service credits based on their years of service, which directly affect their pension calculations. Maximizing service credits involves consistent full-time employment without breaks, as any leave of absence or part-time status may impact the total service credits earned(University of Missouri …)(University of Missouri …).

What are the various options available to employees at the University of Missouri System for receiving their retirement benefits upon reaching normal retirement age, and how do these options influence long-term financial planning for retirement?

Retirement Benefit Options: Upon reaching normal retirement age, employees can choose between a Single Life Annuity or a Joint and Survivor Annuity, both with options for lump-sum payments of 10%, 20%, or 30% of the actuarial present value. These choices influence monthly payout amounts, and selecting a lump sum reduces future monthly benefits proportionally(University of Missouri …).

With respect to the University of Missouri System's Defined Benefit Plan, how are employees' contributions structured, and what implications does this have for their overall retirement savings strategy?

Employee Contributions: Employees contribute 1% of their salary up to $50,000 and 2% for earnings beyond that threshold. This structure helps fund the DB Plan, with the University covering the majority of the cost. Employees need to factor in these contributions as part of their overall retirement savings strategy(University of Missouri …).

How can employees at the University of Missouri System assess their eligibility for early retirement benefits, and what considerations should be taken into account when planning for an early retirement?

Early Retirement Eligibility: Employees may retire early if they meet specific criteria: at least 10 years of service credit for ages 55–60 or at least 5 years of service credit for ages 60–65. Early retirees will receive a reduced benefit to account for the longer payout period(University of Missouri …).

What tax implications should employees of the University of Missouri System be aware of when it comes to distributions from their retirement plans, and how can they effectively navigate these implications?

Tax Implications of Retirement Plan Distributions: Distributions from the University of Missouri System’s DB Plan are subject to federal taxes. Employees can mitigate tax burdens by electing to roll over lump-sum distributions to a qualified retirement account, such as an IRA, to avoid immediate tax liability(University of Missouri …).

What are the policies regarding the continuation of benefits for employees who leave the University of Missouri System, particularly for those who are not vested or are classified as non-vested members?

Non-Vested Employee Policies: Employees who leave the University before vesting in the DB Plan (fewer than 5 years of service) are not eligible for retirement benefits but can receive a refund of their contributions. These non-vested employees must decide whether to receive their refunded contributions as a lump sum or through a rollover to another retirement account(University of Missouri …).

How might changes in employment status, such as taking a leave of absence or returning to work after a break, affect the service credit calculation for an employee at the University of Missouri System?

Impact of Employment Status Changes on Service Credit: Employees who take leaves of absence or return after breaks in employment may experience reductions in service credit. However, certain types of leave, such as military service or medical leave, may allow employees to continue earning service credit(University of Missouri …)(University of Missouri …).

In the event of an employee's death prior to retirement, what benefits are available to their survivors under the University of Missouri System's Defined Benefit Plan, and how can members ensure their wishes are respected?

Survivor Benefits: In the event of an employee’s death before retirement, survivors may be eligible for either a lump sum or monthly payments. Employees can designate beneficiaries to ensure that their wishes are honored, providing financial protection for dependents(University of Missouri …).

How can an employee at the University of Missouri System contact the Human Resources Service Center to obtain personalized assistance regarding their retirement options and any inquiries related to their retirement plan details? These questions require detailed answers and are designed to facilitate a comprehensive understanding of retirement processes and options for employees of the University of Missouri System.

Contacting HR for Assistance: Employees can contact the Human Resources Service Center for personalized assistance regarding their retirement options by emailing hrservicecenter@umsystem.edu or visiting the myHR portal for further details(University of Missouri …).