Posted in Ordinarylife

Retirement – will you be ready?

226 Months – that is the amount of months I have till I retire!  Or in other words the number of salaries I have left assuming I work until I turn 60. Scary isn’t it!

Two of my Facebook friends posted about financial wellbeing or retirement today.   The one posted the following:

“47% of women over the age of 50 are single; *50% of marriages end in divorce *in the first year after divorce, a woman’s standard of living drops an average of 73%; *Of the elderly living in poverty, 3 out of 4 are women, yet 80% of these women were not poor when their husbands were alive; *90% of all women will be solely responsible for their financial well-being within their lifetime.” – US stats.

And the other posted the following link:  http://m.moneyweb.co.za/moneyweb-investment-insights/retirement-fund-contributions-where-is-the-bulls-e

Is your retirement something you think about? Is retirement something you believe you will be ready for?  Or do you rely on the fact that your husband/partner/wife (if you have one) probably has it sorted?  Do you know what position you will be in when you retire or even if you will be able to afford to.  Our daughter will only be starting university when we want to retire.

I work for a small company, I have always worked for small companies (or on contract or traipsed around overseas) I have never had a company Provident Fund or Retirement Fund.  A few years ago I took out a Retirement Annuity but nowhere near enough to cover what I would require to retire comfortably.  I knew I needed to make another plan so I started looking at buying property.  Not to live in, but to rent out.  I, myself, was renting at the time and it made financial sense for me to continue renting, which I did until I got married and movedin with my husband.  Somebody asked me the other day how I manage to do this.  I guess the best article I have found so far to describe it is HERE.  (Thanks Marcia  of Organising Queen for the link to this blog).  I always make sure that the rental I stand to receive covers not only my Bond repayment (I Bond it to the max ) but also the water (tenants pay their own eletricity), rates, levies etc.  And yes, it is totally possible, but you need to look around and be VERY fussy.  I look at a lot of properties!  You also have to realise that because you don’t want to live in that specific neighbourhood does not mean that nobody wants to live in that specific neighbourhood.  The lower income areas generally make for better rental areas.

There are a few other reasons why I buy in lower income areas.

1. I could never afford the deposit (or mortgage) on a more expensive property;

2.  At least if my tenant does not pay or I don’t have a tenant for a month or two I could afford to cover the bond (even if I need to use my credit card for that month – which is not a good idea by the way) and

3. There are more tenants looking to rent in lower income areas so your property is less likely to stand empty.

I have had hassles with tenants not paying and/or damaging my properties, but then so have friends of mine who rent out in more affluent areas.  I don’t beleive that the level of income is always a sign that somebody is going to take care off your property or pay on time.

So, for my retirement I have a goal – I want to own at least 10 rental properties by the time I am 55.  I have 3 at the moment and will be putting in an offer on another one this week.  I have however calculated that if I want to retire solely on the rental and maintain a decent standard of living I need at least 14 paid off properties – remembering that I rent out to the lower end of the market.  Thankfully I also have that RA ….

Do you have any questions?

NB:  Please note that I am NOT a financial advisor or expert in this field.  This is purely based on my experience.

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10 thoughts on “Retirement – will you be ready?

  1. Retirement isn’t something I want to think about at all, with things being so unstable at the moment already and savings being something of a myth I’m worried shuttles about it 😦

    1. If it is any consolation I did not have a permanent job until I was 29 and it never even crossed my mind to think about it before that…..

  2. Of course you know I love this stuff!!! LOVE IT!

    I’m so glad that link helped you – she is awesome and has really good articles on money and mindset.

    My goal was always to retire at 55. But let’s see.. I’m more “healthy” financially than D is because he couldn’t be bothered but I need to nudge him.

    I’ve never taken my pension money when I left jobs and when I looked at my spreadsheet the other day (a few months ago) it was a nice surprise to see the accumulated balances. WOOHOO!

    1. Mr OL has a work Provident Fund and as he has worked for the same people for extended periods of time and has never taken out it is quite good. He has no interest in property though. At least some of my monthy income is not work related.

  3. I see so many people who want to retire on 55. Yet, so many companies rule these days are the age of 60-65.
    I have a provident fund at my company whereas hubby have a Pension Fund. Some way we two are covered for those last few days when we are old. I love the tips you have set out here.

  4. Yup…they say retirement is a race between bankruptcy and death 😉

    We have a lot of annuities and have also gone the property route…our properties are in the poor areas. Strange but true, poor people usually pay their rent.

    We haven’t thought about retirement age. In the line of work we do we will probably continue on and just scale down our time spent at work.

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