Should You Put Your Retirement Money in Real Estate?

 

Thinking about how to fund your retirement can send you into a tailspin. There are lots of different options, and the time seems so far off that it’s easier just to give up and stop thinking about it. But it’s something you need to consider as soon as you’re able, or you’ll regret leaving it too late. Investing in property is a popular option for many people who start thinking about their retirement. Once you own your own home, you can consider whether purchasing property to rent out or sell on at a later date is a good use of your money. Check out these reasons and ways to put your money into property to help fund your retirement.

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Rental Realities

Downsizing Your Home

People who are getting ready to retire now have one benefit that future generations may struggle with. If you bought a house in your younger years, you’re likely to have paid off your home, even if you’ve relocated several times. And you will have built up plenty of equity over the last few decades. When the time to retire arrives, it’s the perfect time to release that capital and downsize to a smaller property. The money you’ll have left over after selling your old house and moving into a smaller one, likely with around three bedrooms at most, could be a decent amount to save or invest.

Using Your Pension Fund to Buy Property

If you’ve been putting money into your pension, you might think about whether it’s a good idea to put it toward a property. There are several countries where it’s possible to do this. If you’re in Australia, you can read Blueprint Wealth’s advice on a self managed super funds property. In the UK, you can use a self-invested personal pension (SIPP) to buy property. There can be significant benefits to this, from taxes to income. You should research the option if you think it might be a useful way of using your retirement funds.

Selling Buy-to-lets When You Retire

If you own a property that you rent out before retirement, you might consider selling it once you retire. It’s been earning you money as you approach the right age, but once you’re no longer working, you might prefer not to look after any property either. The equity in your buy-to-let properties, especially if you’ve paid off the mortgage on them, could add to your funds in a better way than collecting the rental income does.

Buy-to-let Income as an Alternative to Pensions

Many people choose to invest in property as an alternative to a private pension or investment fund based on stocks and shares. You can use the rental income to help you save while you’re still working and to support you once you retire. And there’s the option of cashing in on your investment by selling the property too. Real estate could be a better investment than a cash pension, and you can see income from it while you’re paying money in.

Property is a sound investment for many people, whether it’s their home or a buy-to-let. You should consider putting your money into real estate for a comfortable retirement.

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