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Can I still Invest in Property if I’m close to Retirement?

Most people we talk to in the 55+ age bracket have started thinking seriously about their retirement income. And so many times we’ve heard, ‘Have I left it too late to invest in property?’

Given that the ideal investment timeline to achieve a decent capital return and income stream with property is usually around 15 years, it’s a fair question. However, we don’t think it means you’ve necessarily ‘missed the boat’ if you are in this category and want to invest in property.

Something to consider when deciding to invest in property prior to retirement is that life expectancy has hit an all-time high and continues to improve.

In fact, Australia has  some of the longest living people in the world. This means a typical male retiring at age 65 would need to have retirement funds working for him for nearly 20 more years. Women live even longer.

Currently the average super fund balance at retirement is approximately $300K for men and $140K for women. If these amounts are meant to sustain a, ‘comfortable’ lifestyle for 20+ years, then a decision to invest in property, even if it’s near retirement age, could be a very good choice for Australians.

Keep in mind that the figures quoted above are the current average super fund balances at retirement. There are many people nearing the end of their work life that don’t have balances anywhere near these amounts.

But we’ll still have the age pension, won’t we? Well, it seems the future of this benefit scheme is unclear.

We believe there will still be an age pension in some form, though the government generally warns Australians not to rely on the age pension.

Fortunately, there are strategies to invest in property when you’re closer to retirement – and many people are taking advantage of these. Let’s look at some options.

One typical scenario is if you were expecting your superannuation to run out in 10-15 years. If you invest in property now, it will mean that the property should be generating good rental income, and have grown in value significantly by the time your superannuation runs out.

Note: It’s crucial that you buy the right property if you are nearing retirement, as you can’t afford to make mistakes at this stage of your investment timeline. Cash flow will be an important consideration for most retirees, therefore high strata levies need to be avoided.

You could even decide to invest in property either inside a self-managed superannuation fund (SMSF), outside of an SMSF (in your own name) or both.

We’ve noticed that many people who wish to invest in property closer to retirement hold off on doing this because they don’t think lenders will let them borrow funds for investment.

The good news is that many lenders will offer older investors finance, however most will need to know your exit strategy. This doesn’t need to be complicated though. In fact, a common exit strategy is that you would just sell the property!

So, it is very likely that you’ll still be around to see the financial benefits if you invest in property prior to retirement. Of course, there are also generational benefits for many people who leave valuable assets to their families.

If you are close to retirement but still wish to invest in property we believe it’s critical that you discuss this with a financial planner who is open and enthusiastic about property investment strategies.

Once again, we’ll re-iterate, you can’t afford to make the mistake of buying the wrong property when you’re nearing the end of your work life. Doing it all on your own without the right professional advice will increase the risks tremendously.

If you (or someone you know) would like help with pre-retirement property strategies, or if you would just like to have a chat about your property investment situation, please don’t hesitate to get in touch with us on:

1300 077 766 or email info@adviseable.com.au

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