Planning for retirement is something we all need to think about, however far off it might seem.
More than half of all New Zealanders find themselves struggling financially once they stop work. You don’t have to be one of them, though.
A strategy that builds on what you’ve already got – the equity you’ve gained in your home – can make a huge difference to your future wealth.
Leveraging that equity allows you access to the safest, best-performing type of long-term investment: property.
Possible sources of retirement income
There are three main investment types that can generate a comfortable income for you in retirement.
- Share portfolio. Shares are speculative and volatile in nature and offer none of the benefits of leverage: if you invest a dollar, you get a dollar’s worth of shares. A dollar invested in property, however, can buy you several dollars’ worth of asset because of the effect of leveraging.
- Ongoing business interests. Building a business involves risk, uncertainty and a great deal of time and hard work. It can also require ongoing capital expenditure. Property, on the other hand, is both low in risk and extremely passive.
- Investment property. Property ownership requires a low level of input and offers a high degree of certainty. It provides you with a tangible, appreciating asset that generates passive income for the long term. Read more about the advantages of property.
Cash in the bank
Saving cash is another way to generate retirement funds – but you might be surprised at how large the amounts you need to save actually have to be.
- If you’re 40 now, you’ve got 25 years till the normal retirement age of 65.
- If you want a household income at 65 of $100,000 a year, you need to save $2218 in cash a month, starting now.
- If you’re 50, you need to save $4447 a month starting now.
Property investment – the easiest way
Making strategic property investments now can generate a comfortable retirement income for you later – without the risks of share investment, the hard work of building a business and the large cash outlays of conventional saving.
Talk to us about getting a sound retirement plan in place now and make your retirement a time to look forward to.
