If you need assistance, please call 806-881-4321

Life of Riley Index-are you living the "good life?"

Thursday, June 27, 2013   /   by David Velasquez

Life of Riley Index-are you living the "good life?"

Who knew there was an actual index?  The Life of Riley was a TV show from the 50’s starring William Bendix but the title’s origin came from an expression meaning that a person was living the “good life.” Most people envision themselves living the good life by retirement but don’t really have a plan to get there.


There’s a rough rule of thumb used to estimate how much net worth a person would need by the time they retire to generate a certain income. The target annual income is divided by a safe, conservative yield to determine the investable assets needed.Life of Riley Index.png


A person who wanted $100,000 annual income generated from a 5% investment would need investable assets of $2,000,000. If a person had $500,000 now, they would need to accumulate $1.5 million more by the time they retire. If it was estimated to be 15 years away, they would need to save about $100,000 a year, each year until retirement.


It is a sobering example that could be depressing without a plan. It might be easy to say, “I should have started sooner” which may be true but there is still hope.
Gradually, over the next several years, accumulate rental property and allow the tenant to retire the debt for you. The equity in each property will grow from the amortization of the loan each time a payment is made. It also grows as the property increases in value due to appreciation.


Single family homes as rentals offer the investor an opportunity to meet their retirement and financial


  •         - goals for the following reasons:
  •         - The ability to borrow large loan-to-value mortgages
  •         - At fixed interest rates
  •         - For long terms (easily up to 30 years)
  •         - On appreciating assets
  •         - With significant tax advantages
  •         - And reasonable control not offered by alternative investments.