The Average Real Estate Agent Is Headed for Poverty in Retirement

Two weeks ago, I asked real estate agents to complete a short financial planning survey. The results of this survey are in and the answers are alarming. Before you review the responses below, please note that the average age for agents completing this survey was 48 years old. At the end of the survey results, I’ve included a few observations.

Here are the survey questions and responses:

Are you currently saving for retirement on a consistent basis?

33%   Yes, I set aside money each month for retirement
52%   No, I’m not able to save for retirement
15%   Other

2. Do you have a retirement savings account? (401k or IRA)

16%   I have a 401k savings account
23%   I have an IRA
12%   I have a SEP savings account
35%   I don’t have any retirement savings account
12%   Other

3. Are you familiar with “real” Self Directed IRA Accounts?

61%   Yes
39%   No

4. How much do you currently have saved for retirement?

47%   Less than $25,000
7%    $25,000 to $50,000
10%   $50,000 – $100,000
35%   Over $100,000

5. Do you have an emergency fund?

33%   I don’t have an emergency fund
10%   Emergency fund to cover 1 month of living expenses
20%   Emergency fund to cover 3 months of living expenses
37%   Emergency fund to cover 6 months of living expenses

6. Do you own real estate as an investment?

54%   Yes
46%   No

7. Do you have a part-time or full-time job in addition to selling real estate?

78%   No, I’m a full-time real estate agent
10%   Yes, I have a part-time job
11%   Yes, I have a full-time job

8. Do you have medical insurance?

75%   Yes
25%   No

9. Is your income higher in 2010 when compared to 2009?

39%   My income in 2010 is higher than 2009
21%   My income in 2010 is the same as 2009
40%   My income in 2010 is less than 2009

Do you feel as if you’re on track to reach your savings goal for retirement?

30%   Yes, I’m on track based on my age, current savings & future savings
57%   No, I don’t believe I have enough saved to meet future financial needs
13%   I don’t plan on retiring. I’ll be selling homes until I kick the bucket

These results are very alarming.  I’m very concerned about the future financial well being of those in the real estate industry. We have had a rough couple of years, but this survey reveals that many agents are headed for poverty. I’m not kidding. This is very serious and we need to take action to fix the problem immediately.

We work 24 hours a day, 7 days a week and most of us won’t have enough money to retire.

Of those surveyed, 87% plan to retire at some point in the future. However, 52% are not currently saving for retirement.  13% indicated that they would continue selling homes and didn’t plan to retire. This is fine; however, what happens if you are unable to work because of your health and don’t have any savings?

54% of those surveyed have less than $50,000 saved for retirement. The average age of those responding to the survey is 48 years old. Based on traditional retirement savings calculators, a 48 year old should have between $100,000 and $120,000 saved. This doesn’t seem to be the case for those in our industry. Most agents are way behind in their retirement savings. And even worse, 35% of those surveyed don’t have a retirement savings account in place.

One unusual finding was that 60% of those responding indicated their income was the same or better in 2010 when compared to 2009, but most agents still aren’t saving consistently. After reading the results of the first question, which revealed that 52% of agents aren’t saving on a consistent basis, I automatically assumed this was because our income levels in 2010 were lower than 2009. This is not the case for 60% of those surveyed.

These results are shocking, in and of themselves, but the scariest finding from the survey is that 43% of those surveyed are just ONE month away from financial disaster.

This can be seen in the responses to the question, “Do you have an emergency fund?” An emergency fund is a savings account that you can dip into, if you have a financial emergency, or don’t sell any homes and need some money to live on. Most financial planners recommend saving enough money in your emergency fund to cover 3 months of your total living expenses. This way you could live for 90 days without any income. This recommendation is usually for folks who have full-time jobs. As real estate professionals who are paid commissions, we should have larger emergency funds because our income is more sporadic. To be safe, real estate agents should set aside at least 6 months of living expenses to protect themselves and their families.

We are approaching the end of 2010 and many of us will be setting our goals for 2011 over the next few weeks. What suggestions or recommendations do you have for agents after reading the results to this little survey? What are some simple things agents can start doing to improve their financial situation? Please add them in the comments section so everyone can read them!