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How Much Money Do You Need to Retire?

You may have heard that $1 million is the magic number Australians need for retirement, but there is no solution that will suit everyone. Your lifestyle, family and overall health are all things you should consider when deciding what number works for you personally.

Planning for your retirement involves a number of calculations, from working out your living expenses to choosing the right investment strategies.

As we’ll explain below, one strategy that has proved very successful for many people is to invest in property through a self-managed superannuation fund (SMSF).

Retirement planning

Estimating the amount you need to retire is complex, which is why the Association of Superannuation Funds Australia (ASFA) provides some basic estimates, known as the retirement standard, each quarter, which are based on living either a comfortable or modest lifestyle.

As the table below shows, the dollar amount needed per year for a couple at the end of the September quarter was $71,723.56 for a comfortable lifestyle or $46,620.05 for a modest lifestyle. For a single person, it was $50,981.27 or $32,417.48, respectively.

To achieve this, ASFA estimates that, by age 67, couples would need to have a balance of $690,000 for a comfortable retirement or $100,000 for a modest retirement, while singles would need a balance of $595,000 or $100,000, respectively.

Buying property

If you want to live a comfortable retirement, what can you do to achieve this?

Beyond adding to your super, one option is to use a SMSF to buy an investment property. This is a secure asset that can appreciate over time, ensuring a sustainable income source and offering long-term growth and tax benefits.

The Australian Tax Office (ATO) has certain requirements for buying property with an SMSF. The property must:

  • Meet the sole purpose test of solely providing retirement benefits to fund members
  • Not be acquired from a related party of a member
  • Not be lived in or rented by any fund member or fund members’ relatives


  1. Capital growth

Property is generally an appreciating asset, with property values historically rising over the long-term. It also delivers regular rental income, which also tends to rise over the long-term.

For example, if you are 35 years old and buy a $1 million property that averages 7% annual capital growth, by the time you are 65 that property may be worth more than $8 million.

  1. Tax benefits

Property bought through an SMSF can enjoy tax benefits. The rental income may be taxed at a lower rate (compared to if the same property was held outside super), while the property may be exempt from capital gains tax once the fund members retire.

  1. No change to mortgage serviceability

Taking out a mortgage through your SMSF will have no impact on your personal ability to service a mortgage. That means if you’d like to upsize, undertake renovations or buy a holiday home, your SMSF investment property will not affect this.

  1. Diversification

Including property in your wealth portfolio is a great way to diversify beyond traditional assets like stocks. This means you can spread the risk and take advantage of property market growth.


  1. Limits to use of property

Remember those requirements set by the ATO for buying a property with an SMSF? This can limit how you want to use your property.

  1. Selling can be more difficult

If there are other members in your fund and you want to sell the investment property, this may be more complicated as it would not be directly owned by you.

  1. Higher interest rates

There are fewer lenders offering SMSF home loans compared to regular home loans, while lenders also regard SMSF loans as riskier. As a result, interest rates tend to be higher.

Speak to a professional

Buying property through your SMSF can be a great investment option, but it is recommended you speak to both a financial adviser and a mortgage broker about getting the most out of the process.

A good broker will be able to advise on the type of mortgage that will suit your financial situation and ultimate retirement goals. They will also be able to guide you through the potential risks and rewards of the process.

Interested in buying property through your SMSF? Whether you have already found the ideal property or you’re interested in finding out more, 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.


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