Property Investors Don't Think About Retirement Age
I was glued to the TV last night listening to the PM’s National Day Rally speech. One thing caught my attention: government’s plan to raise the retirement age from 62 to 65, and re-employment age from 67-70 by 2030.
Will I want to work till I am 70?
I don’t foresee myself stop working in the near future. But I also don’t see myself as working right now. Huh? What do I mean?
Marc Anthony aptly puts it this way, “If you love what you do, you’ll never work a day in your life.”
I enjoy what I do right now. By the nature of my work, I have control over my time. I enjoy my family time. I go on family vacations. I am also actively involved in some religious works.
Raising the retirement and re-employment age may be good news for some people.
But I am thinking of many people who have to work because they have to work. They need the money. They don’t get to enjoy their golden years. Or grand-parenthood. Or travel. Or doing the things they have always wanted to do.
Sad. Very sad.
In contrast, others are enjoying the best time of their lives and doing the things they have always wanted to do.
How are they able to do it? Some enjoyed high incomes during their active working years and have good savings. But they are rare.
You can do the sum. Assuming you work from age 25 to 55. You get to live till 85-year-old. So you work for 30 years to save for another 30 years with no active income. Every year that you work, you have to save for 1 year of retirement. And you need to factor in inflation because $1 now is not $1 30
years from now.
If you want to retire with $3,000 to spend every month for 30 years, you need $1.08m. If you factor in 2% inflation rate a year, you will need $1.47m!
How many people have that much money to retire?
That is why most of us can’t stop working.
To retire, the only way is to make your money works hard for you.
The most common vehicle is property investment because it is the best hedge against inflation. The property is not the house you live in. It must be investment properties/properties that can give you passive rental income or capital gains.
One investor of Commonwealth Towers bought a 689sf unit in May 2014 for $992,849. In Dec 18, it was sold for $1,310,478 for a profit of $317,629.
Another seller of a unit at The Nexus made a whopping $1.22 million which was bought for $1.375 million in February 2007, and sold for $2.595 million on July 19.
How long does it take a person to save this much money? Imagine saving $1000 per month – how many months will it take to save even $100K?
The investor probably put in only 20-25% of the purchase price and paid the rest with a bank loan. If it is rented out, the rental helps to cover the loan. The smart investor uses other people’s money to make money. The investor’s language is return on equity.
That’s why private property owners never think about their retirement age.
Associate Deputy Group Director
OrangeTee & Tie Pte Ltd
Danny has been a licensed real estate agent since 2005 and has helped many in Property Wealth Planning.
Do drop him a Whatsapp message or send him an email for a discussion if you are planning to grow your property wealth.