People often ask me - what do you need to retire?

People often ask me - what do you need to retire?

To fund a ‘comfortable’ lifestyle the Association of Superannuation Funds of Australia (ASFA) indicates that you would need a passive income of $50,207 for singles and $70,806 for couples. 

Those numbers equate to around $60,000 and $90,000 in pre-tax income today. 

This is of course assuming you own your home debt-free. 

So what capital do you need to retire? 

If you work backwards and assume you have an asset generating 5% yield a single person would need roughly $1.25m (in addition to having their own home fully paid off) and a couple would need $1.75m. 

Average super balances at retirement are $400k for singles and $700k for couples 

leaving a gap of $855,000 for singles and 244% $1.03m for couples. 

The pension - although generous -  is clearly not enough to find your retirement being $25,065 or $482 per week for singles and a combined pension of $39,269 per year or around $755 per week per adults - and with no adequate savings you risk being one of the 33% of Australians who will retire in poverty?

How do you close that gap and not be one of the 33% of Australians are at risk of retiring in poverty?

A tried and tested  way to beat this hurdle rate is using leverage or borrowings to invest in property. 

And based on a number of polls - most think that property prices will increase over the next 10,20 and 30 years !

For a fairly typical property using a 10% deposit, the internal rate of return is better than 13% per annum with  good properties ending up being around 20% per annum over the long term which comfortably beats the real rate of inflation. (As long as property continues to increase over the long term )

Of course you can also  invest in things like tech stocks and cryptocurrencies. 

 Property seems to be  a safe and practical way to escape the poverty trap and have a retirement that looks something like an advert from a SuperFund!! 

A key ingredient , in my view is to have a team around you that you can trust and rely on to help you on your journey to close the gap! 

A good financial planner,  a good mortgage broker (that’s me :) ) is a key cog in this team - be sure that you have one!