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Investment in Real Estate is Essential for Retirement

Tuesday, April 16, 2013

What are your dreams for retirement? To live near the beach and spend your days walking, swimming, fishing?  To travel the world and see new sites?  To live near your family and be able to spoil the grandkids?  Whatever your dream – the reality is that you will need money to live on.  As a financial planner I often ask my clients ‘how much do you think you need per year to live a comfortable retirement?’ Most people will answer that they think they would need around $50,000 per annum to live comfortably in retirement. Most financial analysts will say that the average amount required at retirement to live comfortably is $500,000 per person.  And this is presuming the family home is already paid off.

And by comfortably, I simply mean being able to eat out one night a week, take a holiday once a year and live a basically comfortable existence.  Nothing extravagant.

The frightening reality is that;

Currently 76% of all retirees in Australia are retiring on less than $20,000pa.  This is only marginally over what is called ‘the poverty line’.

22% of people over 65 need to continue working and this will most likely increase as the Government keeps raising the retirement age.

The current average superannuation payout is only $130,000 for males, and $45,000 for female (2009 figures) – well short of the $500,000 estimated to be required.

People are living longer, and longer and longer.  Generations ago you were lucky if you lived till 65, now people are living well into their 90’s.

Old age pension will continue to deteriorate – there are currently 5 tax payers for every retiree, by 2040 there will be 2.5. Put simply – the Government will not have the funds to keep paying pensions in 20-30 years when a very large proportion of the current generation will be ready to retire.

The retirement age in Australia is currently 65, and if you look at a general break down of 100 average 65 year old Australians these are the statistics:

  • 24 are dead
  • 54 are on pension or welfare
  • 16 are still working
  • 5 are financially independent
  • 1 is wealthy and financially secure


These are sobering statistics but the goods new is that you are reading this book, getting yourself educated and informed and will have the opportunity to become one of the 6 per hundred of Australian’s who are financially independent, wealthy or secure.


So Why Real Estate?

The following chapters will explain to you in detail why Real Estate is superior to all other forms of investment.  That’s a big call I made right there.  But trust me, I am sure by the end of this chapter you will understand why I say that. As the following chapters will explain investing in real estate contains all of the attributes of solid wealth creation such as; capital growth, low volatility, tangibility (bricks and mortar), rising rents, low vacancy rates, high barriers to entry, tax advantages, ability to add value, and the ‘Power of Leverage’.

And the facts speak for themselves.  "Bricks and Mortar" investment is the most common money-making strategy for the Richest 200 Australians according to Business Review Weekly (BRW), which each year publishes an annual list of the nation's wealthiest individuals.

Real estate investment can be a powerful way to start or boost your retirement fund, but you need to do your due diligence and choose the property investment option that is right for you and your financial situation.

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