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When Can I Retire?

Jun 06, 2013

When can I retire is an often asked question by people of all ages. Many people see property as being a vehicle which they use to help them stop work.  In this context ‘stop work’ could equally be a self (or part) – funded retirement or, in the case of the younger population, an opportunity to leave work ahead of schedule.

Irrespective of our personal motivations it is important we all take some time to truly work out what each and every one of us is trying to achieve by investing in property. Of primary consideration is how we intend to use property when we each stop work.

By and large we property investors fall into two distinct groups.

There are those of us who will adopt a staged sell off process and live off the capital profits (growth focussed investors) and there are those who seek to live off surplus rental income (cash flow positive investors).  Then, of course, there is a combination of these two options which may suit.

At this point in time it is important to note that there is not a single solution which addresses everyone’s situation equally well. We are all different and our difference means we each need to tailor our strategy to suit our situation.

We all need to make sure all our plans and destination is mapped out. Further to this, it is equally important we periodically check-in with our plans to make sure we are still on track.

My wife and I are both on the wrong side of ‘50’ and recently managed to sneak away for a long weekend.  We devoted a little piece of the weekend, between long lunches, wine tasting and relaxing massages, checking-in with our stop work plans to make sure we remained on track.

The process we use to answer the question when can I retire is pretty simple.

Firstly, we identified the non-discretionary expenditure we will carry even when we stop work; utility costs, living expenses (food, clothes), health care costs, transport (registration, fuel, servicing, insurance) and property expenses (rates, insurance, maintenance).

Next we looked at those life defining expenses that help make our life what it is (will be); dining out, holidays, sporting activities, gifts, entertainment and so on.  This list of expenses was certainly helped by robust debate to identify what our stop work life would indeed look like.

Finally we put some numbers down against each expense, melted the calculator and worked out what our annual expenditure would look like. A bit more fiddling with the numbers and we worked out how we can afford what we want to do into the future.

For us, property will be an invaluable income source when we both stop work. The key for us both was actually taking the time to go through the exercise of planning (or checking-in) with your stop work plans.

As part of our ‘Road Map’ Webinar series we recently played around with some property scenarios. If you missed the Webinar it can be viewed on Youtube at http://youtu.be/yBcCdfb2p98



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Category: Retirment