[bsvalley]

If you live in a place like the Bay Area, the best retirement plan involves these 4 steps:

1. Owning a home in the Bay Area by the time you retire. No mortgage, no rent. Just bills.

2. Sell that place when you retire in order to move to a cheaper location. Use whatever's left from the sale of your home as an income for the rest of your life. Let's take a $800K home for example, if you make $150K per year, you may qualify after 2-3 years by saving as much cash as you can for a down payment. That house/condo might be worth 1.5 to 2 million dollars in 30 years from now, who knows? Despite the inflation, if you sale it for say $1.5, after tax and real estate fee you might end up with $1.2 net. This is not income money. You could then buy a $500K house somewhere cheap, then use the remaining $700K as part of your retirement money, which brings in $35K net per year for 20 years. This is roughly the equivalent of $50K gross income per year.

3. Make sure to add a little bit in your personal saving account every month, even if it's $100-$500 it's fair enough on a 30 year period.

4. Make sure you add up a little bit in your 401K.

The combination of all 4 will maximize your retirement while leaving in your own place. Real estate in a place like the Bay Area is the best investment because of the location. It doesn't matter if it's a tiny 1 bedroom in San Francisco or a crappy old house in South Bay, it will hold its value over the years and will most likely help you moving to a cheaper place with a lot of cash in hands.

[whack]

> "Real estate in a place like the Bay Area is the best investment because of the location"

How do you know this? What you're saying sounds just like all the bankers and mortgage salesmen in 2007 promising that real estate prices will never fall. If you want to bet on SV real estate being the best investment, go ahead. But call it what it is: a speculative bet.

For those who would prefer not to speculate on their retirement savings, professionals have already put together very sophisticated calculators that tell you whether it's better to buy-or-rent. Check it out and run the numbers yourself, before trusting uncited blanket recommendations given in a HN comment.

http://www.nytimes.com/interactive/business/buy-rent-calcula...

[tehlike]

It is speculative, but so far it has resisted nicely.

All housing went down in the bubble bursts, but bay area still enjoyed nice 7-8% yoy growth so far.

There are couple things that could make it pop badly - like detroit like situation where it goes bankrupt, or the other is tech companies decide to move elsewhere.

I think this is where you should eiversify either way. Buying properties where tech is currently strong is a nice way to diversify

Austin, bay area, ny might be good spots for this.

[hanoz]

It's a bit depressing, and a damning indictment of the system, that most people's only hope for a comfortable retirement is basically a massively leveraged bet on the housing market.

[bsvalley]

The question is, what's better than that today? Nothing but way more risky stuff.

[cylinder]

Stocks are leveraged too. Our entire economy runs on credit.

[toomuchtodo]

> Stocks are leveraged too.

Half-true. You only need 3-25% down to purchase a home. No one is going to extend you credit at that leverage for equities, bonds, etc (you could trade futures and options, or even 3x/4x ETFs, but that's pretty exotic for your typical investor).