A long and comfortable retirement is the right of every Australian in our opinion. However, thanks to the high cost of living here, this often is not possible if you are relying solely on savings and your pension to provide in your later years.
That is why you need to start planning a way to fund your retirement, sooner rather than later. If you do it the right way with professional guidance from the financial advisors here at REIN Group, property investment could be the perfect solution.
But how much money do you really need to retire? And what can property investment do for you?
How much do you need to retire?
The average Australian needs more funds to retire comfortably than you might believe. Guidelines from the Association of Superannuation Funds of Australia indicate that a couple could live comfortably on $59,619 per year, while a single person would need $43,372.
A couple could live comfortably on roughly $59,619 per year after retirement, while a single person would need $43,372.
If those figures do not have you worried, these ones might . According to the World Bank, the average Australian lives to around 83 years old. Assuming you retire at 65 you are likely to enjoy around 18 years of retirement.
That means that to retire comfortably you are going to need a whopping $780,696 as a single person and almost $1.1 million as a couple.
Obviously there is the option to live frugally and enjoy a modest retirement, but after a lifetime of work that seems a little unjust. Could you save everything you need to retire? Let us have a look at the logistics of doing so.
How long will it take to save?
Putting aside a portion of your salary a week is a brilliant way of building up a nest egg, but it might be a struggle to fund your entire retirement this way. As an example of how difficult this might be, let us say you earn the average Australian salary of around $79,000 and put aside 15 per cent of that a year.
It would take almost 60 years to build up enough for a single person to retire comfortable- far too long if you want to retire at 65. Of course you could put a higher percentage of your wages away, but with the high cost of living here in Australia that would be a real challenge for most and could decrease your quality of life.
The solution to these problems could be property investment if you get the right advice, purchase the right property and follow a carefully conceived plan.
How do investment property returns stack up?
Property has been one of the most reliable and high-returning investments in Australia for several decades now. Some predict that the market may be about to moderate, but regardless of that, the trend for property values in Australia is almost always up.
In fact, Reserve Bank data shows that Australian property prices have increased by an average of 7.25 per cent per year over the last 30 years. Put 15 per cent of your income towards buying an investment property instead, and you can take advantage of those gains and have enough money to retire twice over.
Property has been one of the most reliable and high-returning investments in Australia for several decades now.
SQM Research data shows that the average rent in Australia is $555 per week, so even if your property does not increase in value by the time you have paid off your mortgage, your rental income will cover a large chunk of your living costs.
While these examples are meant for purely illustrative purposes, they certainly show the potential that the right investment property can have when securing your financial future.
Get the right help
To get the ball rolling and make sure your retirement is comfortable, it is essential that you get the right financial advice when investing in property. At first it can be a stressful and confusing task, but with a trusted advisor guiding you through the entire process you will get all the results without all the worries.
Here at REIN Group we've been helping Australians secure their financial futures with property for years now. We have got hundreds of happy clients, with growing investment property portfolios and plush retirement plans to look forward to – we would love to help you with yours soon. Get in touch today.