Here’s to your happiness – How to retire in a happy retirement
It maybe the time when you finally put your feet up and enjoy the fruits of your labour but the fact is, retirement is a costly business. IN fact, it’s estimated that if you want to stop working at 60, you’ll need over $900,000 to live comfortably for twenty years.
That’s around a million bucks or more and the kicker is you have to be debt free, but that’s in today’s money and it’s going to be a lot more if retirement is 20 or 30 years away. It’s scary in anyone’s books.
But it doesn’t have to be all doom and gloom. Indeed with a sound investment strategy, you could be on the road to a happy retirement sooner than you think.
Here’s how:
Invest in property
Consider using the equity in your family home to buy an investment property. The potential capital gains and rental income could be used to fund your retirement. But remember, there are risks associated with this strategy. Your tenants need to pay their rent on time, so you can keep on top of your mortgage repayments, plus you’ll need to have around 10K spare each year to pay for maintenance issues.
Consider diversification
You could also use the equity in your family home to invest in shares, bonds, managed funds, property funds or superannuation.
Downsizing
Another option is to sell the family home and move to a smaller, less expensive apartment, you could use the extra money to invest elsewhere.
Make your super work for you
Rental income may be taxed at a higher rate than superannuation, so it’s important that you understand taxation laws and make the most of super tax concessions.
You can set up your own super fund and acquire property via your fund. This mean capital gains or rental income will be taxed at a lower rate, and in you’re a retiree over 60 years old, the income generated is tax-free.
There is one thing to note however. An investment property will incur capital gains tax, stamp duty, real estate fees and high entry costs, so spend some tie weighing up the financial pros and cons before taking the plunge.
Time is a great builder of wealth
Even if you’re in your thirties and in better shape than ever, it shouldn’t put you off planning for your retirement now. Indeed substantial wealth creation is generated over many years. Add to this the rising cost of living expenses and an aging population, and it is easy to see why leveraging off the equity you have in your investment property now, is a great way to maximize your financial security in future years.
