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Retirement Planning: How Property Investment Can Boost Your Retirement Income

Many South Africans might NOT having enough money for retirement. Even if they have saved their entire lives, they may later find out it is not enough.

In fact according to statistics from The 10X South African Reality Report, more than half of the people they surveyed had NO RETIREMENT PLAN at all.

According to the report:

The second annual Retirement Reality Report reveals that even fewer people are preparing for retirement than previously thought and those who say they do have some sort of a plan know dangerously little about it.

This year, a total of 67% of respondents in the Brand Atlas survey indicated they had no retirement plan, or just a vague idea of one, 8% more than the number reported in 2018.

Almost half the respondents (46,2%) said they were not saving for retirement at all, with the overwhelming majority (91%) blaming insufficient means or other priorities.”

So considering all this, not being able to generate enough income from retirement savings is one of the biggest causes of financial stress for South African investors. Nobody wants to be dependent on the government or become a burden to their children.

So, can real estate really make a good retirement investment?

It certainly can.

And many people have secured a comfortable lifestyle by building a profitable portfolio of real estate properties.

Really by far, property investment for retirement purposes is beginning to overtake other forms of pension saving.

Because real estate can be a great asset class and diversification tool. It’s typically not directly correlated to the (other financial) markets and can provide income from rentals or refinancing. Plus hold period is around 4 to 10 years, so it can be seen as a long-term, retirement-friendly game plan.

So in this post, you will discover 7 major ways to tap into property investment for retirement planning:

1. Real Estate Investment Trusts (REITs): A Real Estate Investment Trust (REIT) is an investment in a collection of properties. They are like a mutual fund but instead of a collection of company stocks, it is a collection of properties. REITs allow investors to enjoy the gains of owning property as an asset class without directly owning or managing property. Hence they are an excellent strategy for retirement planning.

REITs are structured to be lower risk investments, plus most have clearly defined investment strategies designed to reduce risk and optimise investor value.

Most South African REITs are diversified across various types of commercial property, like offices, malls, warehouses, factories, hotels and others. These properties are often spread across different cities and provinces.

Moreover, their income comes from various leases with “good credit” tenants that expire at different times.