Estate Living Magazine Design for living - Issue 42 June 2019 | Page 24

P R O P E R T Y
&
The calculations are actually quite fun if you plug them into a
spreadsheet and adjust the annual growth and inflation figures,
so it’s a good idea to review this every year or whenever major
changes in your finances occur. You can download a spreadsheet
to help with the calculations at takechargeofyourmoney.blog/
how-much-do-you-need-to-retire/
How to retire on less
While we can’t do much about inflation or growth on our
investments, we certainly can cut down our expenses. It’s not a
bad idea to do this same calculation with the minimum expenses
you are willing to survive on and see how the final number
reduces. Decreasing your expenses now already will also mean
that you can put more towards your investments and retire with
more security.
If you could survive with R3,000 a month less each month, you
could reduce your lump sum investment by R900,000.
Earning income while retired
Passive income, as you probably know, can make a huge
difference going forward. Using the same example with annual
expenses of R276,000, we can reduce our investments needed
before we retire by R2.4 million if we happened to be receiving
a monthly rental of R8,000. This is simply because we have an
I N V E S T M E N T
income stream to supplement the expenses. The calculations do
unfortunately get more complex if you have a bond that you are
servicing on your rental property, but you can simply look at your
net income, which should hopefully increase each year.
Property isn’t the only form of passive income and it’s important to
focus on creating income streams that are not solely dependent
on your own time and effort. As you get older you would want to
pay someone to manage whatever business or venture you have,
or pass it on to your children if you’re able to do so.
Retirement is certainly not the end of the road as some people
make it out to be. It’s a time to pursue new interests and take on
challenges. The major shift-of-mind when retiring is that you no
longer earn a fixed salary. If, however, you can generate enough
income from other sources that will cover your expenses when
you retire then nothing will change besides the fact that you’ll
have a whole lot more free time to do all the things that you’ve
always wanted to.
Feeling too old, you say? Challenge yourself to do something
that ‘old people’ shouldn’t be doing, and see how exciting that
is! Good planning can lead to great retirement years.
Brendan Dale