Many financial planners believe that income-producing real estate, whether it's a physical asset like an apartment building or an investment in a real estate investment trust or mutual fund, is an important aspect of a well-performing retirement portfolio.

According to a survey performed by the Transamerica Center for Retirement Studies between November 2020 and December 2020, while 75% of retirees keep their money in bank accounts or CDs, only 12% own real estate other than their home residence for investment.

"We discovered that portfolios with a combination of equities, bonds, and real estate outperform other portfolios in our research," said Ken. H. Johnson, Ph.D., a real-estate economist at Florida Atlantic University. "Owning real estate gives you a better risk/return profile."

The "ideal mix" in a portfolio, according to Dr. Johnson, is 50 percent real estate, 30 percent stocks, and 20 percent bonds.

He claims that this formula is sufficiently diversified to offer retirement stability. Your own residence, an investment property, or a combination of both can be included in the real-estate component.

But what type of real estate? And should you invest directly in income-producing hard assets, like residential rental property or commercial property, or make more passive investments, such as a REIT, by purchasing publicly traded shares or investing in a mutual fund?

Joe Pelayo, a commercial real estate broker in Fort Lauderdale who works with individual investors, recommends warehouse properties to his clients looking to invest for retirement because they usually require little active management.

Similarly, medical-office buildings also have long-term tenants and often have triple-net leases, he said, where the tenants pay expenses and assume management responsibilities for the building. Residential investment takes more work.