Today I’m asking the big, critical question that too many of us shy away from. How much money do you need to die?
Personally, as I’ve watched my parents over the past two decades since retiring, I’ve noticed their quality of life has diminished because they aren’t able to live the way they truly want.
They don’t really go on holidays – they don’t even go out to dinner – and I’m hyper-aware that a lot of older Australians their age are in the same boat.
The average life expectancy is rising, and that’s something a lot of people didn’t factor in when planning for retirement. In this day and age if you’re generally healthy, you have a good 30 years of life to live after finishing work.
The question is, will you merely survive in that time – or will you thrive?
Today the pension sits at about $36,000 per annum, per couple. That kind of money is basic survival, it’s living below the need state and is what we call pensioner poverty.
One in four pensioners are living in poverty. A huge factor that determines those circumstances is the security of housing. Owning your home has shown to be a game changer in retirement as the cost of rent is substantial for someone on a pension.
Of course, the more real estate you own, the more secure you will be in the long term. See having just one property could mean losing it in the event of financial hardship, or even through something like divorce.
Setting yourself up with a real estate investment strategy now means you’ll have more bases covered in case things go pear-shaped. By paying down the debts while you’re still working, you’ll be able to focus on living off the passive income throughout retirement.
A 30 YEAR JOURNEY
So, we know we’re all going to live a long time – let’s break that down.
The first 30 years of most people’s lives is dedicated to understanding themselves. The next 30 years is centred on making money and building wealth, and the last 30 years is about using the money you have made to have an extraordinary life.
It can be daunting to know where your financials need to sit to take on a 30-year journey when you’re not working. It’s a big conversation to have, but if you want to live your retirement years in a quality, dream-like state, you need to work out the numbers.
The initial response by most people is ‘I’ll aim for a million dollars’, but the cost of living is constantly going up. You could easily spend a million dollars at $100,000 a year over the course of 10 years.
Instead, it’s likely you’ll need hundreds of thousands each year to truly live and thrive. For me, my exact number is $9 million. I want $200,000 a year because above all I enjoy exploring the world, and that’s how I want to spend my time in retirement after working hard for decades.
Everyone has their own number and their own aspirations, so don’t think my plan has to dictate yours. Instead, start thinking about how you want to spend those last 30 years of your exceptional life, and work out how to secure more assets now that will help to produce income for you in the future.
LET YOUR INVESTMENTS WORK FOR YOU
Property is a fantastic asset strategy to work towards because it comes with three income sources – tax depreciation, cash flow and growth.
Setting yourself up for retirement means having more than a single source of income to rely on. A strong real estate portfolio can provide a lot of financial stability, and potentially freedom, in those later years.
It’s not too late to crack the property market. Positive Real Estate holds free workshops that help potential investors from all stages of life figure out how they can make real estate work for them.
By Sam Saggers