As Australians, we’re often taught from a young age that owning our own home is an essential part of the Australian dream. As you look towards your retirement you may start to question how property might pay a role in your overall financial plan for retirement. While there are a multitude of investment options available to retirees, property investment is still a popular investment vehicle and should be considered as part of your overall plan.
We asked Peter Hodgson, Director – Financial Planning at Walshs, an accounting and financial planning firm based in Brisbane, to discuss the pros and cons of including property assets in your retirement plan.
Should property be part of your retirement plan?
When considering whether to include property assets in your retirement plan, it’s essential to ensure that property investment aligns with your overall financial goals and risk tolerance.
Property investment is a long-term strategy and it requires careful planning, research, and management. However, purchasing property, whether it’s to live in now and rent later, or as investment from the start, can provide a reliable source of income and capital growth over the long term, making it an attractive option for retirement planning.
One of the primary advantages of including property assets in your retirement plan is that it can provide a regular and stable source of rental income in your retirement years. This income can be used to supplement your retirement savings, cover living expenses, or reinvest in further property, or other investments.
Property investment can also provide capital growth resulting in a valuable asset that can be sold to supplement your retirement funds or passed onto future generations.
However, there are also several risks associated with property investment. Property values can be subject to market fluctuations and interest rate rises, as we’ve seen recently. There is always a risk of a property market downturn though, historically, this tends to even out over the long term.
Property investment also requires a significant upfront investment and ongoing management, including maintenance and tenant management, which can make it unaffordable or a burden for some retirees
How your financial planner can help determine your retirement plan
It’s recommended that you consult with a good financial planner who can help you assess your financial situation and determine whether property investment is a good addition to your retirement plan.
At Walshs, our financial planning team will work with you to create your retirement plan, helping to determine your financial retirement goals and then providing strategic advice to get you there. From there, both our investment team and our lending team can work closely with you to help you reach your goals.
We provide comprehensive retirement planning services, including Self-Managed Superannuation Fund (SMSF) as well as covering all your options when it comes to investment strategies.
Because our team comprises both financial planning experts and a lending department with specialist mortgage brokers, we can provide comprehensive support during your property investment journey, including home loan advice and financing options. Our team of experienced mortgage brokers can help you secure a home loan with competitive interest rates and flexible repayment options, allowing you to invest in property with confidence.
We recommend starting the retirement planning process as early as possible in your career, particularly if you plan to benefit from property assets in your retirement. The earlier you start, the more time you have to build a diversified property portfolio and take advantage of the long-term benefits of property investment.
Property investments, and owning your own home, can play a significant role in your overall financial plan for retirement. However, it’s important to weigh up the pros and cons. For advice tailored to you, get in touch with the Walshs financial planning team, to ensure you are making informed decisions and maximising your retirement savings.
Peter Hodgson