If You’re Planning to Live off the Pension, Don’t Get Sick!

If You’re Planning to Live off the Pension, Don’t Get Sick!

It’s crazy to hear how many Australians are still relying on the pension to get by after retirement age.

The Pension Isn’t The Same As It Used to Be

The pension used to be an acceptable option, especially if you owned your own home. You could live in your home and use the pension to cover your day-to-day expenses. And then downsize and spend the extra cash on bigger expenses. It worked for a lot of Australians.

However, the old age pension isn’t what it used to be. I think now, it’s something like $888 per fortnight, or $444 per week. It hasn’t gone up with living costs and pensioners struggle to make ends meet at the best of times. And it’s not going to get any better.

The What If’s?

Best-case scenario for a pensioner is that they will be able to cover their few expenses with $444 per week – so, food, bills, etc. But what if you have more than a few expenses? What is the likelihood of you getting sick at some point in your future, close to or after retirement age? What would you do?

My Mum, The Property Investor

Let me tell you a story about my mum…

She was late to property investing, and started in her early fifties with her first property. She wasn’t a great investor and not overly strategic, she just bought properties when she could. But in the space of about 10 years, she ended up acquiring around 5 properties.

It was a very good thing that she did invest when she did, though, because in her sixties, she got very ill and needed to fund her own care.

Here in Australia, we do have a pretty good public healthcare system compared to most places, but the coverage it offers is limited and you can’t really rely on it to provide for everything, as my mum found out.

So, my mum needed to fund her own care from those five properties, which had a net worth of about a million dollars. By the time she passed away, she had about $100,000 remaining.

Can you imagine how things might have looked if she hadn’t had the value of those properties she’d invested in? Imagine if she’d been reliant on the public system of healthcare and aged pension. She wouldn’t have been able to get the kind of care she really needed, at a time when it mattered the most.

Prepare for the Worst-Case Scenario

Now, cross fingers and toes that you don’t get sick and that you get to enjoy a long, healthy retirement and live off the income from your properties for a long while. But just in case the worse happens to you, it’s also good to know that you have the net worth sitting there, available, if you need it. You do not need to rely on the pension or public health system. You do not need to worry about whether the government will take care of you (newsflash: it won’t!).

Please don’t think that it won’t happen to you. It might not, but it’s best to be prepared for what might happen. It’s best to assume that you can’t survive on $444 per week, or the equivalent at the time you retire.

So… get investing!

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Happy property investing,

Daimien J Patterson

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