Now that you are in the age gap of 55 - 65, you are getting closer to retirement, sorry but that could be a bad or good thing. Hopefully over the past number of years, you will have kept growing your asset base, through accessing equity from your first investment property to purchase your next one, and so on.
Your team of specialists around you will now begin to advise you on your end game. Your exit strategy, which is the next part of your investment and retirement journey.
When you create your exit strategy, we are not talking about selling your properties, not necessarily, and perhaps not at all. We are talking about paying off your home loan entirely, then paying off each investment property, therefore slowly lowering your loan to value ratio on these properties, as you exit this phase of your investing.
Strategies are put in place where you work towards ensuring that your loans are consistently reduced. This would include having at least one or more loans on Principal and Interest payments, so that in this final phase, you are well on your way to owning all your properties and retiring with passive income.
The objective of your wealth building plan is to retire with this passive income in place. The more passive income you can create before retirement the better off you will be to be able to enjoy your retirement years. Your passive income will come from your tenants paying you rent.
Looking to purchase your first investment property or add to your portfolio? Everyone is different and it's important to understand where you are and where you want to go with building wealth. Contact us for a Free Property Investment Consultation Here Today.
Interestingly enough, retirement at any age is about the choices we make, with investment strategies, we have more choices about how that retirement looks. Following well planned and implemented strategies, with a team of specialists who provide sound advice when you buy your properties, and allowing compounding, leverage and time to work its magic, you will arrive at this point of financial success and freedom.
With the correct financial foundations in place, all your income, including rental income has been effective in reducing your home loan.
Owning this outright is the first part of your successful retirement strategy. Having minimised interest with a 100% offset account and maintaining a reasonably comfortable budget for your living expenses, now translates to replicating this same process with your first investment property.
Your team of specialists have ensured that throughout the whole long game of life, the right people are managing their fields of expertise for you. Your property strategist and property management team have ensured your properties are in growth areas.
Your mortgage broker has ensured that the correct finance structures are in place, and has conducted regular reviews ensuring your loans meet your needs and are competitive in the market place.
Your rental manager has provided quality tenants, ensured the property is well looked after through regular inspections, and has kept you informed of such things as rental increases available through CPI, plus any other matters which are of benefit to you.
Your solicitor has good and uptodate records of your Will including Power of Attorney. If you don't have these, it's more important than ever to get them set up.
You now focus on paying your investment property loan down, through Principal and Interest repayments. Your broker arranges this for you, together with an offset account which will minimise the interest you now pay. The rental income from all your properties, together with your own income now ensures that you own this property sooner.
This process must begin as soon as your own home is paid in full. Ensure that you continue this process paying down each investment property in turn, until you either own all of your portfolio outright, or you decide to sell one to pay down the rest.
Again, your team of specialists who have been with you from the beginning, will best advise you on what your exit strategy looks like, for your individual circumstances. Some people may consider selling their own home, downsizing, and using the surplus funds to pay down their investment loans.
A comfortable retirement for couples is considered to be $58,000.
A modest retirement is $34,000 for the same couple.
For a single it’s only $23,000.
At these figures, it’s concerning that over 50% of retirees will struggle in their 65+ years.
A time when everyone deserves better.
To break those figures down, couples are looking at $1,115 in a “comfortable” retirement.
The average super at retirement age is said to be around $290,000 for men and $138,000 for women.
So, a couple, living a comfortable retirement have enough to provide for them for 7 years! ($428,000/$58,000)
Men have enough for a modest retirement for about 12 years ($290,000/$23,000) and women 6 years ($138,000/$23,000.
Australians are topping up their super because they are aware that these figures (above) simply will not afford them a comfortable retirement.
However, preparing for retirement is more than just accumulating a sizeable super at retirement. How that money is invested by the various super funds, determines the financial benefits. Then we need to calculate how best to continue investing that super wisely, with the right funds, and how to spend that money wisely to make it last. Knowing whether your super will be enough requires assistance from a financial professional.
You need to know exactly how your money will be invested, while you draw down from it, how much you need to support the lifestyle you choose and how that lifestyle will change as you age.
We are surprised when businesses try to put you in the same box as everyone else. You are not the same as everyone else and that's why we make sure we listen to you and your circumstances. Grab your free property investing consultation today here.
Now is a good time if you haven't already to check how your super is performing and whether it needs a check-up. You may have started your super many years ago and things may have changed with or without you knowing.
If you have had many jobs over the years you may have defaulted to your employers super fund resulting in two or more separate accounts rather than maximising the one super fund.
There are many options now to decide on how your super is invested and allocated, check to ensure you have the right investment mix for your situation, what was once good in your 30's may not be so good in your 50's.
Also check your admin fees. There have been a lot of media and Government out cry over administration fees being charged. You could save yourself thousands just by reducing your admin fees. Remember every little bit counts.
One of the main differences between retiring poor and retiring wealthy is the mindset and limiting beliefs you may or may not have. Have a look through the examples below and see which one are you or which one do you want to be?
What are you prepared to do for a positive outcome in your wealth creation and retirement plans?
The Age Pension is a scheme which pays out a steady income to eligible Australians to help them mange with the costs of living when they're retired.
If you're eligible, you can receive up to $926.20 a fortnight from the government as part of the Age Pension or $1,396.20 a fortnight for couples.
Though, not everyone is eligible to receive the Age Pension: it depends on how much you earn and the value of your assets and investments.
From July 2017, the qualifying age for the Age Pension increased from 65 years to 65 years and 6 months. The qualifying age will then increase by 6 months every 2 years, reaching 67 years by July 2023.
When are you eligible to receive the Age Pension.
If you were born between July 1952 and December 1953 you are eligible to receive the Age Pension (though only if you qualify) at the age of 65 years and 6 months.
- Born between January 1954 and June 1955 at 66 years of age.
- Born between July 1955 to December 1956 at 66 years and 6 months years of age.
- Born after January 1957 onwards at 67 years of age.
These changes are the governments way of slowing down the drain on aged pensions, keeping you in the workforce longer, paying taxes, to support this same pension drain.
To make this even clearer, when you do finally access the Age Pension, as at March 2019 – singles receive $24,000 per year and couples will get $36,000 per year.
There has to be a better way to retire.
With the right investment portfolio, sitting alongside your super at retirement, you really can have the lifestyle you choose, rather than the one mentioned above.
The reality is anyone can be a successful property investor. Regardless of your current income. If you can commit to sticking with it over the long game, spending less and saving more as well as seeking guidance from the right specialists, you too, can succeed and create wealth through property investing.
Sometimes you may not have the right information to make a decision about investing or retirement. With Key to Australia's latest information and updates you can be educated to help you make an informed decision. Don't worry we are not interested in spamming you as we hate it as well.
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