How Investing In Property Can Help Fund Your Dream Retirement

Most Australians dream about the day they can finally stop working, so they can take a cruise around the world or potter about in the garden with the grandkids.

But even though you might be eager to begin your post-work life, new research from KPMG found Australian workers are actually retiring at the oldest age since the early 1970s.

In 2022, the expected retirement age was:

• 2 years for men (the highest since 1972)
• 8 years for women (the highest since 1971)

How much do you need to retire?

Everyone’s dream retirement looks different. That said, if you want to live out your golden years in comfort, your nest egg needs to be able to last the distance. So how much money do you actually need?

Well, if you own your own home, the Association of Superannuation Funds of Australia estimates you need a super balance at retirement of around:

• $545,000 for singles
• $640,000 for couples

Understandably, many Australians are worried that their nest egg will come up short, according to Finder, which found:

• 62% of respondents were concerned about not having enough money in retirement
• 34% believe they would ‘manage’ but would have to cut back on spending
• 28% said they wouldn’t have enough superannuation to stop work
• 18% thought they had amassed enough money to retire comfortably

How property can help you build wealth for your retirement

Superannuation will likely be the main way you save for retirement. But if your financial circumstances allow, buying an investment property can be a great way of boosting these savings for three big reasons.

Firstly, Australian residential property has a long history of strong capital growth. CoreLogic research found that, over the 30 years to July 2022, the national median property price jumped by a massive 382%.

So if you buy a quality property and hold on to it for the long term, there’s a good chance the value of your property will increase significantly over the years, letting you sell it at a higher price than you paid for it. This capital gain can then provide you with a significant source of retirement income.

Secondly, renting out the property can provide you with a steady income stream. Before you retire, you can use this income to help pay down your investment loan, building equity in the property. Once you hang up your boots, it’s a source of passive income you can live off if you decide not to sell.

Finally, the chances are that the majority of your superannuation savings will be invested in the stock market. So buying an investment property can be a great way to diversify your investment portfolio, reducing your risk exposure.

Property investment can also come with tax benefits. For example, you may be able to claim tax deductions on expenses related to the property, such as mortgage interest payments, property management fees, repairs and maintenance, as well as being eligible for depreciation deductions.

How to succeed with property investment

Investing in property is a long-term game, so patience and a strategic approach are key to success. As part of this, you should:

• Educate yourself: before investing in any type of property, do your research so you understand the market and local trends
• Determine your investment goals: having clear goals will help guide your decision-making process
• Crunch the numbers: keep in mind that purchasing a property involves more than just the purchase price, so factor in other expenses such as stamp duty, legal fees and ongoing maintenance costs. It’s also a good idea to have a financial buffer to give you breathing room should your circumstances change

While investing in Australian residential property can be a great way to build long-term wealth, like any investment it does come with risks. So it’s important to do your due diligence and seek professional advice before making any property investment decisions.

Looking to boost your retirement nest-egg by investing in property? Shore Financial can help. To discuss your options, call us on 1300 416 700, email us on info@shorefinancial.come.au or fill in this online form.