There is a major dilemma facing many Baby Boomer investors today. Their successes in real estate have produced a failure in quality of life. What is the problem, and is there a solution?  Let's start with the problem: a "good problem" to have. Twenty to 40 years ago, you bought rental real estate, maybe a small apartment complex or several rental houses. This can be a great strat­egy to build wealth for someone in their earlier years of investing. But as I advise my own clients, owning actively managed real estate is best for a season of your life, but not for the duration of your life.

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In order to plan realistically for the future, you need to have a clear understanding of what money you need when you retire. This will include the cost of living and special activities you will have. It is estimated that you will need to replace about 80% of your pre-retirement earnings in order to keep the standard of living you have been used to.

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The federal government imposes a substantial tax on gifts of money or property above certain levels. Without such a tax someone with a sizable estate could give away a large portion of their property before death and escape death taxes altogether. For this reason, the gift tax acts more or less as a backstop to the estate tax. And yet, few people actually pay a gift tax during their lifetime. A gift program can substantially reduce overall transfer taxes; however, it requires good planning and a commitment to proceed with the gifts.

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