Retirement Investment: Are you on track, what’s in demand and what’s the market have to offer?

Retirement investment. When I was writing my book I asked a very simple question and got a surprisingly monotonous answer.

The question was, ‘How much money do you want to retire on?’ ‘Ohhh… (after some consideration), about 75% of what I am on now would be about right,' came the answer.

And while few were below this amount, many were above it!

How does some simple math calculate?

Let’s be ultra conservative but very realistic for many and say that today’s average income is $44,000 before tax.

NOTE: (If you're on more and you still hope for 75% of what your earning now then this is going to hurt because you'll obviously need more than what your about to read!)

So on average, we optimistically hope for $33,000 before tax in retirement from our investments.

In order to earn $33,000 before tax in retirement you will need to invest...

$660,000 at 5% return

$440,000 at 7.5% return

$330,000 at 10% return

$264,000 at 12.5% return

$220,000 at 15% return

Achieving double-digit returns on an invested lump sum over the long term through any investment vehicle is fanciful. Certainly investing current super payout amounts which are far below the amount of what is required being in the order of $55,000 to $67,000 - into any legal investment vehicle will return much less than this.

How’s your retirement investment looking and what about the future?

If you are earning an average wage now and are depending on your outlook of optimistic returns, the two questions you need to ask yourself are:

1) *Where is your required $250,000 to $350,000 or even $660,000 nest egg coming from? (Remember this is in today’s un-inflated dollars)

2) *How can I protect my nest egg income from inflation?

Now you can read much more about this subject in my book but the crux of the matter is that building a large enough nest egg is only half the solution. Your nest egg return needs to outperform the effects of inflation!

Yes your retirement nest egg should perhaps include that inflation fighting beauty called property and the more of it the better. What sort of property? There is a lot to choose from but supply and demand is the key. One of the big demand areas will be due to the retiring baby boomers and is in fact retirement investment property.

What sort of property?

We know that as we age our mobility is not what it used to be. We also know that many of the boomer demographic like the tree change or sea change. And we know that the Boomers know that they have worked all their life and by hook or by crook they are now going to enjoy themselves. Coupled with all this of course is affordability.

It should be remembered that any retirement investment not only has to cater for both wants and needs, but also personal capabilities of your niche market.

For instance: Stairs or split level properties are not the ideal for an aging occupant. Nor are properties located any more than a short distance to public transport, hospitals or shopping and care facilities.

While it follows what good property selection should be about, good retirement investment housing or bricks and mortar are niche areas of investment that have to cater to very specific in demand requirements.

If you go down this path of investment consider the applicability and longevity of your chosen property for this niche market. It is certainly a growing market and worthy of closer inspection to possibly add to your portfolio.

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