Consider these realities…

Longevity

We are living longer healthier lives.

“I guess it all started about a month ago when I went to see my doctor.

He said I’m probably going to live to be 100.

I’m only budgeted to live until I’m 80.

Don’t you see? I’m living on a fixed income.

All of a sudden, I’m afraid.

I mean, I’ll be retiring soon.

What if I don’t have enough left? “

Do you know how much is in your super account right now?

Do you know how much will be in there once you retire?

Will this be enough to support you in retirement?

You may be shocked to find out that according to the ABS, the average Australian retires with only $214,000 in their super. Assuming a low risk investment return of 3% and an inflation rate of 2%, based on retirement age of 65 and assuming a life expectancy of 85 this means an annual benefit of $14,384.  After 20 years, this annual sum is equivalent to only $9,680 in purchasing power.

You could rely on government pension benefits to supplement your income but unfunded pension liabilities are growing larger every day. The government has already increased the retirement age and lowered the asset value test threshold* in an attempt to plug this deficit. This however, will not solve the issue and the government will need to further increase the retirement age and again lower the asset value test threshold. Eventually, even the amount of pension paid may need to be reduced.

Therefore, you cannot rely on the government to help you in retirement. You must take matters into your own hands. Property is one of the best returning asset classes over the past 100 years. Averaging an annual return of 10% per year. This is coupled with a regular cash flow if the property is rented out. Buying an investment property and paying it off before retirement will leave you with a fantastic income generating asset that can be used to greatly supplement your superannuation.

*the asset test threshold is an amount of assets that you are allowed to hold while receiving your full pension entitlement. Every dollar in assets that you have above this threshold reduces your pension entitlement.

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