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Who really cares about your retirement?

Wednesday, 4th Jun 2014

retirement

One of the hotly-debated initiatives announced in the recent federal budget is the plan to lift the pension age to 70 by 2035. Under this plan, Australians born after 1965 will have to work until they are 70 before they are eligible for the age pension.

Regardless of your specific views on the matter, the discussions should serve as a wake-up call that ultimately you can’t rely on the government to support you in retirement.

Why is this happening?

It is a well-publicised fact that our population is ageing, just as it is in most modern western economies. Currently 13% of Australians are aged over 65, but this figure will grow to 25% by 2047.

By some estimates, one in three of those aged 65 today will live past 90 and half of those could live beyond 100.

With more people on the pension and a declining tax base, it’s easy to see why the government is looking to reduce expenditure in this area. Whether the details are correct is for the politicians to debate.

The reality of retirement

While few people aspire to live on the pension, most retirees don’t have a choice. Almost 80 per cent of Australians over the age of 65 receive some sort of income support and life for many of them can be tough.

The single aged pension, including supplements, is currently only around $827 per fortnight or just over $21,000 per annum.

There is also the fact that many people will simply be unable to work until they are 70 due to the physical nature of their employment.

Even many of those who are lucky enough to have a sizable superannuation nest egg at retirement may struggle to afford their desired lifestyle in the decades following retirement.

Clearly, if you want something other than the norm, you need to take personal responsibility and actively plan for a better retirement future.

Time to get serious about property investment

I believe a growing number of people will look to property investment for the answer, hoping that a combination of capital growth and rental income will provide adequate financial support in retirement.

But casually owning one or two investment properties probably won’t be enough. More than ever you need to take a professional approach to investing. You need to choose the right type of properties, set up the right financial and ownership structures, manage your investment diligently and maximise your tax benefits along the way.

Unless you have the time and knowledge to do it properly, you should turn to the experts. Momentum Wealth was specifically established to guide people through all the stages involved in building wealth through property investment to provide long-term support through to retirement.

You also need to start as early as possible. If you start at the age of 30 and just buy just one property worth $500,000 and it grows at 8% per annum that will be worth around $5m at age 60. If you wait until 40 that same property will be worth around $2.3m at age 60. If you wait until 50 it will only be worth around $1.1m.

If you set realistic goals, employ time-tested strategies, and make informed decisions, you can enjoy the retirement you desire at a time of your choosing.