At what age will you have enough money to retire on?

October 31, 2014
Aurelio Tenaglia

Over the next 30 years it is predicted that because of the advances in medical technology life expectancy will increase from 82 to 91 years. The retirement age will possibly move to about 70 meaning most people will have to fund their own retirement for 20 – 25 years.

 

Did you know that only one-third of people who retire, do so when they feel they are financially ready to support themselves? In addition, 40% of people (aged from 50 years plus) are forced to retire due to illness or redundancy – happening unexpectedly and not at a time that they are financially secure.

 

Not having enough money to retire on is a significant worry for many Australians. Many people are aware that the basic pension will not support the lifestyle that they have become used to while employed.

 

A simple but effective wealth accumulation strategy that many overlook is to use the equity they accumulate in their family home to buy more property. I suggest to all my clients that they should evaluate the benefits of using some of the equity they have in their property as a deposit to buy more property. Some of my clients (who are only on moderate incomes) already have and are on target to accumulate a new property every year.

 

When retirement time comes around for these people, the plan is that they will be able to sell off their property portfolio or live off the rental income, thereby having enough money to do the things they have dreamt of doing through their working life.

 

It is important for each person to consider today, ways of growing their retirement income and take the steps today to make sure they have enough money to last through their retirement years.

 

Self-funded retirees are those who fund and support their own retirement without receiving any government means-tested pensions. The government appreciates the efforts of self-funded retirees as these people are helping to take the pressure off the pension system by supporting themselves, and as a result has introduced some tax benefits for self-funded retirees. Additionally, self-funded retirees are still able to access concessional rates for travel and health.

 

Planning for your retirement fundamentally requires you to assess your financial needs and create assets to produce an income to meet your needs. An important piece of advice to those wishing to plan for a comfortable retirement is to invest some of your money in assets that will grow over time, such as shares or property. This helps to ensure that your capital grows in value at the same rate of inflation and in line with your income needs.

 

Time is a great friend in planning for retirement and today is a great day to start the plan. Why not consider whether you can purchase an investment property as step one toward a comfortable retirement? Call me on 0438 258 888 or email me at aurelio.tenaglia@mortgagechoice.com.au if you’d like to talk further about the possibilities available to you.

 

Posted in: Property investment

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