The 100-Year-Old Pension Pot: Adding Lifelong Value with Property Investment
“How much money do I need to save for retirement?” is likely to be a question you’ve asked yourself. Whether your search has been met with an exact figure or the ambiguous “as much as possible,” there’s a chance you’re still slightly hesitant, which is perfectly understandable. Retirement is a bit of a mystery until you’ve reached it - as is the case with most future chapters.
A two-part question
While “How much money do I need to save for retirement?” is a great starting point, the question actually consists of two parts: an estimated time frame and a lifestyle budget. From person to person, these will vary. In regards to the former, any time frame - be it living to 100 or living to 80, could tie you to an unguaranteed perception of how much money will be “enough.” That’s why many experts would suggest creating “as much wealth as possible.”
The issues with “as much as possible”
We believe this theory may be putting your calculation in a bit of a loop - for two reasons:
- Creating as much wealth as possible isn’t as easy as it sounds. One of the reasons financial goals are so important is because they look, and act, like finish lines. In the same way that runners speed up the end of the race, quantifiable financial goals can push you forward, giving you something to work towards. “As much as possible” may seem too insubstantial to drive any momentum.
- What happens if “as much as possible” isn’t enough? A common retirement fear is burning through your hard-earned lump sum too quickly. This can boil down to:
- Inefficient planning,
- An asset allocation which stretched or unsatisfied your risk appetite,
- Unexpected costs, from medical payments to home maintenance.
Falling short might be a real danger. And while your lump sum could be supported by a government or company pension scheme, these monthly top ups may only support part of your costs. If your living costs unexpectedly rise above your pre-planned budget, a lump sum may only stretch you so far. And what happens then?
The 100-Year-Old Pension Pot: Adding Lifelong Value with Property Investment
If you’re approaching retirement after decades of career-building, leaving behind a comfortable salary which not only supported, but enhanced your lifestyle, can be a huge mental shift. As you may be aware, continued income can add a huge amount of value to any pension pot. But there’s no reason that your salary needs to come to a halt. Whilst it may in theory, there are other ways to help secure monthly income.
For this reason, property investment is hugely popular amongst retirement planners. It has the potential to provide a stream of top ups and extend the lifetime of your lump sum. In an article published by Forbes, Ari Rastegar notes, “Is real estate a good way to generate strong returns for retirement? Absolutely. Having a reasonably steady, and a mostly predictable, income stream is the Holy Grail for retirees.”
In some instances, if your investment property continues to be tenanted throughout your retirement, you could have access to an income-generator which may support a 100-year goal, or even a 150-year goal. In fact, securing rental income can loosen your ties to a time-frame, potentially giving you true financial freedom. This, in addition to a lump sum and a diversified portfolio, could offer you the comfortable and long retirement you’re after.
You can start with just £10
Before you worry about the huge cost of investing property, you no longer need to. Thanks to major developments in technology, finance, and property, you could become a landlord and start earning monthly rental income with as little as £10. Property crowdfunding is changing the way people invest in property, creating an affordable, hassle-free and online experience.
By Jenna Kamal
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