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Peter RighettiPeter Righetti – Director, Sandhurst Real Estate

Your thoughts on retirement will have a lot to do with your age. In your 20’s and 30’s the last thing you are thinking about is retirement so any general discussion is usually a waste of time.

Into your 40’s and 50’s retirement begins to come more into focus, and more importantly, what assets and superannuation you will have to live on after you cease full time work.

The whole issue of people’s retirement savings and superannuation has become an important topic for conversation over the past 3 years (since the Global Financial Crisis) as returns on most people’s superannuation have plummeted.

Through the 1990’s and up to 2007 we could all rely on our superannuation growing steadily with strong returns. Since the GFC, super returns have been either negative or at best very low.

So what can individuals do to have plenty of asset backing in retirement ?

The first is to buy and pay off your own home. Your primary residence is the most tax effective asset you can own and, in retirement it is either an asset you can sell to trade down to something smaller or a mortgage free place to live.

Secondly, you can build long term wealth through the ownership of well located property.

The sharemarket and other investment related products can be another source of asset growth although the past three years has demonstrated that you cannot assume that investing money in even “blue chip” shares will guarantee much of a return.

The secret to building wealth through property ownership is to start early and to plan long term. People who purchased properties in the 1980’s are not that worried about the current downturn because over the period of ownership they have had great capital growth. You need to be prepared to think long term.

Many people are moving their superannuation to a Self Managed fund to give them greater control. You need a substantial balance in your fund to make this worthwhile but it is worth seeking advice. We will cover this in more detail in our next article.

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