Many truck drivers enter the industry because the pay is good, and the jobs are secure. But not many of the young men and women who earn their CDL consider what a truck driver retirement plan may entail. In fact, it’s not uncommon for people who opted for a career in the trucking industry over spending hundreds of thousands of dollars on a four-year college degree to expect to work until they’re eligible for social security.
But the high salaries today’s professional big rig operators earn can easily position you for early retirement or set you up for particularly comfortable golden years if you play your financial cards well. If you are a veteran driver or a rookie choosing among a variety of truck driving jobs, consider how these long-term investment strategies could set you up later in life.
Parlay Your Truck Driver Salary into Long-Term Wealth
Consider for a moment that, according to the Bureau of Labor and Statistics, the average truck driver earned $49,920 in 2022 or approximately $24 per hour. Top-paying trucking companies continue to increase salaries to secure the help of experienced truck driving professionals. Among the highest of pay are reported top earners making $110,000. Many companies are also offering incentives such as cash bonuses to sign on, health care, and profit sharing in some cases. If you have an entrepreneurial streak, Owner Operators are pulling down upwards of $220,000 in some cases.
The point is that for those thinking about truck driving as a paycheck-to-paycheck career, you may want to take notice that you can make a great deal of money. The question is: how to invest that hard-earned cash? These are some of the traditional investment strategies that truckers can use to augment their financial portfolio and plan for your truck driver retirement days with little effort.
- Invest in a 401(k): A 401(k) is an employer-sponsored retirement savings plan that offers significant tax benefits. You select a percentage of your income to be automatically taken out of each paycheck and most employers will make a matching contribution, essentially giving you free money. Beware, check the fine print as there are stipulations to earn the match! You will always completely own, or be vested, in your contributions and can not lose this portion. If you leave the employer, you do have the ability to transfer your account to a new retirement plan without penalty or tax consequences. However, any withdrawals before age 59½ will be subject to an early withdrawal penalty and ordinary income tax. The contribution limits change annually; for 2023 you may allocate $22,500 to this type of truck driver retirement fund.
- Mutual Funds/Exchange-Traded Funds (ETFs): This is done by groups of people pooling their resources and having a manager use the resources to purchase long-term diversified investments. They tend to be relatively low risk and good earners. However, these types of investments have their ups and downs. An index fund is a type of mutual fund that by its nature tends to have lower costs and may be an attractive investment for a truck driver's retirement strategy.
- Stocks: This is a classic long-term wealth strategy used by everyday Americans to build a nest egg for their retirement years. Consider working with a financial planner early in your trucking career on stocks that are steady earners. The point is to select stocks that you cash in 10 to 20 years down the road.
- Bonds: Corporate bonds, municipal bonds, and U.S. Treasuries are considered relatively safe investments with proven yields. If you don’t like risk, this class of investment might be right for your portfolio.
- Certificates of Deposit: This type of investment earns a set profit over a predetermined time period. Any truck driver can go online and research which financial institution offers the best CD rates. You can walk into most banks and invest in a CD. Just be aware of the fact that early withdrawal generally results in penalties.
Along with these methods of investing the salary you earn as a professional freight hauler, traditional and Roth IRAs also remain viable options to discuss with a qualified tax advisor.
If you decide to utilize these strategies, it may be prudent to direct a percentage of your salary toward developing a healthy financial portfolio, investing early and often to take advantage of time for potential growth. But there are alternative pathways for funding one's truck driver retirement plan.
Flipping Land Can Yield High Return on Investment
Television is loaded with reality shows about house flipping. Someone buys a blighted property and directs contractors to revitalize it and, boom, they sell it for a significant profit. That scenario doesn’t lend itself particularly well to the truck driving lifestyle. The home-flipping industry is far too hands-on and uncertain. But land, well, they aren’t making any more of it.
What doesn’t make reality TV is that overgrown properties near neighborhoods and main roads can be quite valuable once they are prepped for building. During your travels, keep an eye out for buildable lots that are still raw. For relatively little investment, you may have an opportunit to purchase a lot, have it professionally cleared, and have a local real estate agent put it on the market for a hefty profit. It’s essential to work with a local real estate professional to understand the market trends in the area.
This proactive wealth-building strategy doesn’t require a great deal of your time. It also puts your travel experiences to additional use. How many occupations provide people with geographical information that can be leveraged?
Real Estate Investments for Truck Drivers
There are trending real estate strategies that may be well suited for long haul truckers. These include multifamily properties and buying your retirement home first. If that sounds counterintuitive, consider the following reasoning why truckers are uniquely positioned for this type of financial strategy.
Buy Your Retirement Home First
Although this may seem like putting the cart in front of the horse, over-the-road truckers spend a lot of time away from home. That minimizes, to some degree, the need to make a substantial investment into your home base. That reality has prompted some drivers to pivot, buying property in luxury areas suited each truck driver's retirement plan.
One of the key strategies is to buy a property that can earn strong rental income, such as a beach community or even college town. Then, enlist the services of a property management company to oversee rental, maintenance, and day-to-day operations. You may also block out times when you use it for vacationing much like a timeshare. The only difference is that you own it. The best part of using this financial strategy is that the property will get paid off from rental revenue. With some due diligence, you may turn a profit while your retirement property gets paid off.
Multifamily Properties for Truck Drivers
A more difficult road is buying a multifamily property that you live in and collect rents. Like the previous scenario, you may enjoy having the rentals effectively pay the mortgage and taxes while holding on to more of your own money. The downside is that it can be challenging to have tenants living next door. You will also need someone reliable to oversee the property while you are earning a living on the open road. Although this might not be the easiest road to take, it can work out well financially for some truckers.
Plan for Your Truck Driver Retirement Early
Getting that first big truck driving paycheck may make you want to indulge yourself by purchasing things you have always wanted. It’s certainly a time for celebration because you have arrived in a good paying career. But consider putting away a portion of every paycheck toward investments that can strengthen your long-term financial health and well-being.
CDLjobs.com is not a financial advisor. The content on this website is for informational purposes only. In order to make the best financial decision that suits your own needs, you must conduct your own research and seek the advice of a licensed financial advisor if necessary. Know that all investments involve some form of risk and there is no guarantee that you will be successful in making, saving, or investing money; nor is there any guarantee that you won't experience any loss when investing. Always remember to make smart decisions and do your own research!
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