When Northern Virginians Retire

I'm having a hard time feeling sorry for this couple, who thought it was a good plan to have more than 90% of their retirement portfolio on one asset class. Also, they are "emotionally attached" to it.

Such perfect afternoons are exactly what Steve, 61, and Carol, 60, had in mind when they retired to Florida from Virginia two years ago. But those days are rare. Instead, the Daimlers spend most of their time consumed with selling two investment properties they bought shortly after the move - holding open houses, distributing fliers, cold-calling realtors and catering to prospective buyers.
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To supplement their retirement savings of $260,000, they figured they'd buy fixer-upper homes to renovate, then sell at a profit in the state's hot housing market. "We thought we'd make $100,000 without batting an eye," says Carol.

But when the housing bubble burst, so did their dreams of a real-estate funded retirement. The properties have been on the market for nine months without a serious offer, and the carrying costs are killer: The Daimlers pay more than $65,000 a year on their mortgages (including loans for their primary residence and a vacation house in North Carolina), plus tens of thousands more for property taxes, insurance and maintenance.

The couple are pulling out $15,000 a month from savings to cover their expenses, and they've already run through more than half of their nest egg.

Money is so tight that Carol has stopped filling prescriptions for her cholesterol medicine. Steve says he has no choice but to go back to work. "The financial pressure is too great," he says.
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"I know you should have a diversified portfolio," says Steve. "But I believed real estate would give us bigger returns." In 1986 the couple bought their first investment properties - two townhouses near their home in Springfield, Va. - using money Carol inherited from her mom.

In the early 1990's they sold one of the houses and used the proceeds to build a vacation home in the Outer Banks. Current estimated value: $900,000.
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Carol quit her job first, in the spring of 2005. Shortly after, the couple sold their house in Virginia and paid cash for their retirement dream home: a $640,000, 3,700-square-foot house with a game room and an in-ground pool in a gated community in Port Orange, south of Daytona Beach.

The advice from the "experts" and this couple's response:

Sell the vacation home. To alleviate their cash shortage and help rebuild their savings, Michael Cirino, a financial planner with Lincoln Financial Group in Jacksonville, Fla., urges the Daimlers to sell their beach house in the Outer Banks. Probable net: $650,000. But while Steve is open to the idea, Carol is reluctant. "I have an emotional attachment to that home," she says, "and I don't want to make any more fast decisions."