The latest Association of Superannuation Funds of Australia research shows that, in general, a couple looking to achieve a comfortable retirement needs to spend $57,195 a year, while those seeking a ‘modest’ retirement lifestyle need to spend $33,120 a year which means that the average couple need a lump sum of about $660,000 to survive for about 20 years in retirement.
“The quality of retirement directly depends on how much money people have,” ASFA chief executive Pauline Vamos said.
“People need to look at all their assets ranging from investment properties to the pension.”
How much exactly you need to invest now if you want to retire on property?!
Investment Property Calculator has developed a free Retire on Investment Rental Property Calculator in Excel for people who plan to retire on properties. You can download the calculator here.
With this calculator, you can estimate what you need to invest for Modest lifestyle – single, Modest lifestyle – couple, Comfortable lifestyle – single, and Comfortable lifestyle – couple.
Here is an example from the calculator.
Modest lifestyle – single | Modest lifestyle – couple | Comfortable lifestyle – single | Comfortable lifestyle – couple | |
Annual income needed * | $23,032 | $33,120 | $41,830 | $57,195 |
What you need to invest now | ||||
Property expenses per year | $6,910 | $9,936 | $12,549 | $17,159 |
Average income tax rate | 9.95% | 17.88% | 21.91% | 26.64% |
Rent per year | $33,251 | $52,432 | $69,633 | $101,352 |
Rental yield | 5.50% | 5.50% | 5.50% | 5.50% |
Property value | $604,566 | $953,301 | $1,266,059 | $1,842,763 |
Property appreciation per year | 5.00% | 5.00% | 5.00% | 5.00% |
Retire in years | 20 | 20 | 20 | 20 |
Property value to invest now | $227,855 | $359,289 | $477,164 | $694,518 |
Mortgage | $182,284 | $287,431 | $381,731 | $555,614 |
Mortgage interest rate | 6.00% | 6.00% | 6.00% | 6.00% |
Mortgage term | 20 | 20 | 20 | 20 |
Total mortgage repayment | $313,425 | $494,219 | $656,362 | $955,343 |
Total interest repayment | $131,141 | $206,788 | $274,631 | $399,728 |
Download the Retire on Investment Rental Property Calculator now!
All the Annual income needed information is from The Association of Superannuation Funds of Australia and can be found through this link.