Investment property or no investment property in retirement?

Keeping an investment property in retirement has a number of considerations ranging from taxation issues to Centrelink issues. They can be a great source of income and growth but again, it is all dependent on the individual asset you own and like anything whether that be shares, managed funds or cash – they all have different risk and return characteristics.

One thing to consider with property is liquidity in retirement. Note – the following example is really simplified but let’s say you have an $800,000 property that is paying you $600 per week in net rent (about $31,200 p.a.) and that meets your living expenses fine. Then what happens if you need to replace the ducted air conditioner in the property costing $10,000 or you might need a new car yourself of let’s say $30,000?

Unless you have liquid cash assets outside of your property then you can’t sell a portion of the investment property overnight to fund your purchases (whereas if you have other more liquid assets like some managed funds / cash – then you can sell a portion of these assets overnight).

It really depends on your situation if property is right for you and what you want to gain out of it in retirement. Let’s say your goal is capital growth and you plan to keep it until your late 70’s/80’s that is fine, or some people may want to liquidate it now to start funding and enjoying their retirement, knowing they can potentially forgo some growth but have the benefit of using the funds now.