Divesting Ron & Rhonda Burgundy’s $1.2M Real Estate Portfolio (& increasing retirement income by $72,000/year)

I’m Ron Burgundy?!?!

Just kidding.

I am working with a couple that has a $1.2M Real Estate portfolio that they want to systematically sell over the next 7–10 years.

Their main objectives are to retire slowly from property management but maximize and (hopefully) fully replace their rental income with other guaranteed income sources so they can retire stress-free.

The names have been changed (obviously), and I had a little fun with it… but this is a real example of how to effectively deploy a real estate divestiture and actually provide an increase in guaranteed income in retirement.

Let’s get started:

⭐️The Deets for the Burgundy’s⭐️

✅ Ron (64) and Rhonda (62) Burgundy

✅ Net Worth = $2M+

✅ $600,000 in a brokerage investment account

✅ Ron’s Pension = $1,000/month (+2%/year inflation)

✅ Rhonda’s part-time income = $20,000/year for 4 more years

✅ $40,000/year of social security income (@ 70) (which they did not want to include as part of the income analysis)

✅ Current real estate holdings provide $60,000/year income

✅ They want to divest their real estate portfolio starting in 4 years

✅ They’ll sell 25% of their real estate holdings every 2 years

✅ They want to start the process of retiring in 4 years (when they begin systematically selling off their real estate holdings)

⭐️The Strategy⭐️

✅ $600k in their brokerage investment account will remain for discretionary retirement spending (this money can be invested more aggressively than many other retirees because they have guaranteed income sources)

✅ In 4 years they will sell the first 25% of their real estate holdings ($300,000) and purchase a guaranteed, lifetime income vehicle

✅ Every 2 years, they will sell another 25% and purchase more guaranteed income to replace the income from their real estate portfolio

✅ They will combat inflation with Ron’s pension, social security, and their liquid investments (their brokerage investment account)

✅ They will fully replace the income from their real estate holdings in 7 years (actually increasing their total guaranteed income)

⭐️The Results⭐️

✅ Real estate divestiture #1 provides $25,000/year of guaranteed, lifetime income (note: each 25% sale of the real estate portfolio will reduce the rental income by approximately 25%. So 25% of the current rental income is approximately $15,000 per year)

✅ Real estate divestitures #2, #3, and #4 provide $30k, $36k, and $41k/yr of guaranteed income respectively (see income analysis below)

✅ They have approximately $700,000 of discretionary spending money to travel, go sailing, skydive, rent speedboats, and go to every winery in America during retirement

✅ They have $40,000/year of social security income that will continue to grow with cost-of-living adjustments (not modeled in the income analysis)

✅ They have $12,000/year from Ron’s pension starting @ age 65 and growing at 2% each year.

✅ They have $132,000/year of GUARANTEED lifetime income from the real estate divestiture (they systematically more than doubled the $60,000/year they were making from their rental income)

✅ TOTAL: $184,000/year of guaranteed, retirement income, inflation-protection, AND $700k of flexible, discretionary money to use for ANYTHING they want in retirement….

❌ The Alternative is to keep their real estate portfolio (reducing their retirement income by approximately $72,000/year) PLUS forcing them to continue dealing with the headaches and expenses of managing a real estate portfolio when they want to be doing other things in retirement❌

I don’t know about you, but I would rather be enjoying the wineries 🍷 and sailboats ⛵️ in retirement… how about you⁉️