Retiring on the Backs of Your Grand kids....

by roy mackey

August 26, 2020

     Lets face it we all want to retire with a life of luxury. This post here is going to tell you how it was done in the past and how you can get your grand kids or neighbors grand kids pay for it all. It is pure genius! The best part is it actually looks like "investing". Not to mention the system is all set up for you to take advantage of. You could start enjoying a life of luxury tomorrow if you wanted. You might have to act fast though or you could miss the boat.

     OK I admit this technique is a little old and not quite sure it will work that much longer. In fact you may be half in already and not know it. If so you might want to "cash out" soon. Here is how this scheme worked in the past. Forty years ago give or take ten or twenty years you just had to buy a house. Houses back then cost just a few short years of wages. You then lived in that house for thirty or more years. Over time the place eventually got run down even though you patched it up here and there. Then you put that house on the market and sell it for the mind bending inflated present market price. Please note this price is not what the house is really worth. It is the price the realtors and banks can squeeze out of your or your neighbors naive grand kids. Which is not just a few short years of wages like you may have paid but often decades of years wages.

     This means you get to live in the house all that time and then right about the time it is wore out you list it at the inflated prices they are now asking. Once it is sold you walk away with a small fortune stashed in your bank account!!! That small fortune gets paid to you by the bank that lent the money to your neighbors kids or grand kids. This makes it nice because you don't have to look those kids in the face as they count out the thousands and thousands of dollars by hand. Their lawyers just give your lawyers a check.

     Thus in effect those naive kids get to be your slaves buying you all the champagne and caviar you can eat for the rest of your life. Now I admit it is a bit of a ponzie scheme that could be quickly reaching the end. Partly because no one has yet come up with mortgages that are longer than 100 years. These days with houses so high and wages so low a supply of new victims..., uh..., I mean "investors" is drying up like a short summer rain in Death Valley. 

     Now there are some people out there who might want to class this as child abuse but hey I disagree. Hell we had to pack firewood when we were kids. Now that was child abuse! Besides they make their own choices in life. Now even though school teaches nothing about common sense finances they could have still read about it on their own after they finished school. After all it is not that hard to figure out that saving money like school taught you is a fools move. When when the bank pays you less than one percent interest on the money you save and inflation robs you of five percent you end up losing four percent per year. All this aside they could still get in and then out with a small fortune if the scheme goes on long enough. If not well they can always go bankrupt. That only takes seven years. When you are young who cares about seven years.  

     Normally this gig would not have worked because where would those kids get the money? Well thankfully the banking system was set up for to handle that. By them lending these naive kids the money with small payments they stood to make huge amounts of interest..., off the money they never really had in the first place. Of course this meant they were the real owners of the property right up until the last payment was made.

     Now even though the amount of the loan payments would far exceed thirty percent of their income they still let them have the money. If you are older you may remember that banks would not lend money to you for housing that exceed thirty percent of your income. Of course if they still followed that rule then no one would be able to buy houses any more. At least a hell of a lot less anyway.   

     Sure those kids will be eternally in debt working decades to pay off that house but you get to live in luxury for the rest of your retired life. How cool is that? Now admittedly if it were not for the banks lending the kids that money you would be out of luck. You would be stuck getting the fair market value which would be somewhere near or less than you originally paid thirty years ago. This would be devastating to all those Boomers who never saved enough for retirement because they were too busy traveling and buying new cars.

     Now another cool part of this is the fact that it looks sort like investing. OK I admit real "investing" is where you lend someone money so they can start building life changing widgets and when they do and sell them then you get a cut in the take. The world is a better place because of those widgets so it turns out to be a win/win. With the house thing in reality it is more of a scheme than real investing but it still works. The opportunity to sell old junk at super inflated prices to young fools is still there. Which turns out to be win/lose. The only good part is all these young naive buyers don't realize it. Sorta like late comers in the pyramid scheme. They see the profit those before them made and think they are in for the same thing. Often their rude awakening is also a shocking surprise.  

     I know someone who forty years ago bought a house for $40,000. At the time he was making ten bucks an hour. Now that same house is "worth" $400,000 and the wage for the job he did is still under $20 an hour. The house went up ten times and the wage not even twice. (In case you were wondering this is why a lot of you still have kids living in your basement. Now you know why). This was all because too many people like you "invested" in housing for fun and profit. Which when you boil it down was just buying the bank a house, paying them tons of interest and being stuck with all the maintenance costs on that "investment". Luckily though there was an upcoming generation willing to buy those hyper inflated houses. In fact a lot since then have been able to get in on the "gold rush".

     Of course the trouble now is the smart ones are getting out while the getting out is good. Pyramid schemes never last forever. Now if you were lucky you might be able to pull off a couple of short flips before the endgame gets here but you will want to be fast. The other problem is the younger generation are waking up to not only this scheme but that houses are not the "investment" people have always thought they were. It was the banks that made it look like they were. Now of course this does make it hard on the younger generations but hey..., live and learn. They should have read more books once they got out of school like I said above.  

     Now if you did buy a house years ago you might want to "cash in" quickly because there is a ton of evidence of this scheme coming to an end. There are a ton of older people are getting anxious to sell their "nest eggs" and move to something cheaper and live off the "profits". In fact a lot of the early birds have already cashed out their expensive city property and moved to the country for a fraction of the cost. Of course a lot of them are hoping they can pull the same scheme off again with their country property down the road. Strangely humans often act like if they have enough money they will live forever. How much longer this will all last will depend on how much longer the banks are able to fool this younger crowd of buyers.

     Now of course some people out there might feel a little guilty about this but don't. If you never banked up enough for your retirement other than your house then you have no choice. Beside those younger generations have their whole lives ahead of them you might only have a few days to a few years. You need to cash in when the cashing in in is good.  

     Just something to think about.......  oh... and to those not sure...... yes I am being sarcastic here.....  : )