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Planning For An Early Retirement

Planning For An Early Retirement

Some may say if you’re 30 with a family and new to property, now is not the time to consider early retirement, but that’s not the case, writes Ben King.

By: Ben King

1 July 2024

Wellingtonians Mark and Adalynn didn’t feel they were too young to think about retirement at 30. They had big dreams and they wanted a $150,000 annual passive income by the time they hit 56. Here’s how Mark and Adalynn used property investment to make this dream a reality.

Getting Started

When Adalynn read an article about how superannuation was likely to change in the future, it scared her. She got her husband on board and they decided to invest in property.

“We went to the bank and asked how much we could borrow for an investment property,” Mark says.

Up until then, the couple had been investing in funds and shares, but Adalynn said she wanted to make use of the bank’s money as well as their own.

Here’s the thing: the couple were only two years past buying their first home and they had used most of their savings and KiwiSaver. Wellington house prices had dived off a cliff. It didn’t appear to be the best time to invest, but the couple found themselves in a good position.

“The land was bought before the Covid market increase. We got lucky, but there was pressure to get things signed off before things went up in price,” Mark says. “While our property was being built, it went up in value.”

That’s how they had the equity to get an investment property. After approaching the bank about a mortgage, they sat down with me and we created a Wealth Plan.

Growth Potential

Only two years after buying their first home, the couple purchased an investment property in Auckland. They chose Auckland because of its growth potential. There’s a high percentage of people living in and moving to Auckland, which keeps rental demand high.

They also wanted to diversify their portfolio; they already have a lot of money tied up in Wellington.

“It was an investment; we don’t need to see it or be personally attached to it. It’s bought for a long term,” Adalynn said. “Mark was in Google Maps a lot though.”

Three Properties

Mark and Adalynn want to retire on $150,000 (gross) per year. To achieve this, they’ll need to buy three growth properties.

They’ll hold onto them for 15 years, then sell them to buy high-yielding properties, like apartments. That way they can live off the rent for the rest of their lives.

If the couple retire at 55, there’s a good chance they have 35 to 40 years’ worth of retirement ahead of them. This strategy enables them to keep up that income for the entirety ... it doesn’t ever stop.

This is the standard Golden Goose strategy from Opes Partners and the one with the most longevity. Three investment properties don’t sound like much to generate that kind of money, but it does.

Top Tips

Mark is more risk-averse than Adalynn. He was also the more reluctant investor. This is not uncommon when couples choose to invest; one partner is usually more into it than the other.

The big question is, how do you convince the other one to get on board?

Adalynn says it’s all about consuming the same stuff ... listening to the same podcasts and reading the same books. That’s how you get on the same page and the conversations can then start.

In their situation, it helped that she already had a good background in other investments. “I think he trusted me enough,” she says.

So, what about advice for other investors?

Adalynn says it’s so important to have a good team behind you. As parents to a young child, they are pretty time-poor. “We aren’t DIY people and, even if we were, we don’t have time,” she says.

It’s also important to take risks, she says. “Better to do something than do nothing. Once you know what you want to achieve, it becomes like a routine to you as well. You’ve got to understand what you’re doing it for.”

Retirement Date

Mark and Adalynn don’t want to wait until they’re 65 to retire. The couple hope the mid-50s will be it for them. That way they can enjoy travelling and spending time with family. That’s just 20 years away. “If we’re not travelling, then sleeping in and waking up to a nice breakfast will be the goal. Doing gardening, family dinners, charity work. Things like that,” she says.

Next Steps

Mike and Adalynn’s experience might resonate with some potential investors. Maybe you’ve got a young family, and just getting on the property ladder. It’s never too early to start thinking about your retirement. If you want to discuss your options, the next step is to book a Portfolio Planning Session with us here at Opes Partners.

Disclaimer: Just remember this is a column in a magazine, going out to thousands of people. It’s not personal financial advice. But, it is an example of what can be achieved with personalised financial advice. If you are wanting to book a consultation, email us through the website at https://www.opespartners.co.nz