Why buy-to-let investment gives you control over your pension

How to have the retirement lifestyle you desire

Are you frustrated by your pension fund performance? Some years it does well, other years it loses money. Every year you pay fees and commissions, whether it wins, loses or draws. If you invest in a pension fund which invests in the stock market, investment funds or bonds and you feel frustrated, you’re suffering from a lack of control over your financial objectives.

In this article, you’ll learn who is really in control of your financial future. You’ll also discover why buy-to-let investment puts you in charge of your retirement like no pension plan can.

Who controls your future in retirement?

Whatever stock, or fund, or bond you invest in, when you invest you give all the control over to someone else:

  • If you invest in shares, you rely on the company’s management to make the decisions that you hope will increase its profits and therefore increase the value of your investment.
  • Put your money in an investment fund, and you’re putting your faith in the fund manager to choose the best investments.
  • And even if a company does well, if the economy collapses, its profits and share prices can crash.

On top of this, the government dictates the maximum amount your pension fund can grow too! You have a lifetime allowance of £1 million. In other words, the government doesn’t want you to have income in retirement of more than around £50,000! If your pension fund exceeds the lifetime allowance, you could be taxed up to 55% on any lump sum or income it earns on the excess.

Take back control with buy-to-let investment

When you invest in buy-to-let property, you take back control. You decide where you will invest, what property you buy, and how you make money from that property. For example:

  • If you buy off-plan property, you’ll probably invest at a discount to market value. Try buying shares at a discount. Just can’t be done.
  • You choose how the property is let – furnished or unfurnished, for example.
  • You decide how to finance your investment, including what mortgage product to use.
  • You select the investment property manager, and they manage your investment property how you want them to. Or you could undertake the day-to-day property management tasks yourself. The choice is yours.

Buy-to-let returns are infinite

When you invest in a traditional pension fund, your retirement income is produced from the growth and dividends made before you retire. If you buy an annuity, you no longer have the capital you have invested. It’s converted to retirement income. If you use a drawdown pension, you are taking money away from the pot. Your funds could stop growing, and even deplete if stock market values head south.

In other words, with traditional pension funds, you must estimate how long you’ll need income for.

Returns on buy-to-let last forever:

  • You live off the cash flow produced.
  • Over time, as you raise rents, your income increases.
  • You don’t have to guess when you will die.
  • You don’t have to guess what the inflation rate will be.

Not only are you in control of your investment, but your income is inflation-proofed. Your standard of living shouldn’t fall as you get older.

How will many buy-to-let properties be enough to retire?

There is only one question to answer when investing in buy-to-let properties for retirement:

“How much income do you need to retire?”

Work this out, and buy enough properties to make the cash flow you need each month. If you want to maintain your current lifestyle in retirement, you could find that three rental properties will be enough. It is the basis of my 3+1 property investment plan.

You see, most people spend around a third of their income on rent or mortgage, a third of household expenses and living, and a third on taxes. When you own three buy-to-let properties, you’ll be receiving a third of every household’s income. It will replace your income – on which you’ll pay a third on your mortgage, a third on taxes, and the other third on your daily living.

Each year, you review rents and increase them in line with inflation. Your income is inflation-proofed. When your mortgage is repaid, you get a massive boost to your disposable income.

How to work out how many buy-to-let properties you need to retire

How many properties you need depends on your objectives for retirement. There is no ‘one size fits all’ calculation for determining how many properties you need to retire. We all have different needs and different desires. Our bucket lists are different. You may need five or ten properties. Perhaps more.

Contact one of our team today on +44 (0)207 923 6100, and we’ll help you define how much income you need in retirement. We’ll help you work out how much money you can make from each buy-to-let investment. From there, together we can develop a flexible plan to achieve the retirement lifestyle you desire.

Live with passion

Brett Alegre-Wood

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