Are you ready for retirement?
Retirement is something that we dream about for most of our lives. And we're always told that it's something we should plan for as early as possible.
However, if you're like many Australians, you've probably put off planning for retirement for a few years.
Other than your compulsory minimum superannuation payments, chances are you haven't put too much thought toward saving any extra for retirement.
While this can give you more money to play with during your pre-retirement years, once it becomes time to actually retire, you might not have enough.
Yes, there's always the government Age Pension, but will it be able to fund the plans you've outlined for yourself?
This is when looking at your wealth building options becomes crucial, so you can retire and live the lifestyle you've always dreamed of.
Real estate investing for retirement
One popular avenue for wealth creation in Australia is through real estate investing. Australia's strong property market has given many investors the opportunity to purchase a valuable asset that grows over time.
One of the top features about investing in property is that it's relatively easy if you're already a homeowner.
This means that if you're still a long way from retirement, but you already own a house, you can simply refinance your loan to go towards an investment.
A refinance takes the hassle out of waiting to save up a deposit for another home. Instead, you can use money you've already stored up through making payments to your loan.
Once you own a rental property, you can decide on which strategy will get you to reach your financial goals. It might be that you want to own a negatively geared property to reap the tax benefits. On the other hand, you might want to earn a high amount of rent each week and secure a steady cashflow. Speaking with a wealth coach is the best way to find out which strategy is most suitable for your goals.
Using your SMSF funds
If you're a member of a self managed super fund (SMSF) and you're getting closer to retirement age, you could use your fund to invest in property.
One of the benefits about doing this is that you won't have to pay any Capital Gains Tax if your SMSF has been converted into pension phase. This means that once you retire and sell your investment property, you can potentially save thousands.
However, if you decide to keep your investment property while you're in pension phase, any income you generate from it will be taxed at zero per cent.
If your SMSF hasn't yet been converted to pension phase, the tax rate for rental income is still at a low 15 per cent.
As Australians are living for longer, planning for retirement financially should be at the forefront of your mind. Are you ready?