Funding Retirement with Property Investments

August 30th, 2013

According to a Property Club study, Australians will need more than just their superannuation to live a long and comfortable retirement, and the solution is to invest in property.

The average super balances of $84,293 and $47,480 for a 45-year-old man and woman respectively indicate that people can only afford to live on their super after retirement for three years or less. A man with an average income and super balance could retire with $422,021 and a woman could have $303,782. However, people are living longer and the cost of living is expected to increase over the next 20 years, so super should be double or triple the amount.

This problem could be solved by investing in property, as house prices are predicted to rise to $2 million by 2033. Interest rates are also low, so now is the best time to start investing. There are banks offering 5-year fixed-rate loans of 5%, which is half of a property cycle.

A 10-year commitment is required when investing in property to fund retirement. A deposit can be secured by using a home’s equity and then high rental returns can be used to pay off the mortgage. The ideal situation during retirement is to reap significant gains from one property cycle with a low marginal tax rate.

Source: http://www.news.com.au/realestate/news/average-australians-need-more-than-just-compulsory-super-to-survive-life-after-work-and-that8217s-where-property-comes-in/story-fnd91nhy-1226696421862