One thing you can be sure of is that your pension is unlikely to be adequate for the number of years you are likely to live. The cost of living is soaring and pensions are definitely not keeping pace. Pension funds are subject to the whims and fancies of those who manage them, as well as the appalling lack of integrity, knowledge and ability of those appointed to manage the funds. Most people know that corruption, fraud, mismanagement e.t.c, are a worrying reality in our country.
Railway Pensioners used to feel confident that they would always be cared for by their excellent Pension Fund – that didn’t happen. Many are almost destitute and feel trapped in a situation that doesn’t seem to be improving.
Government employees, who have their pensions invested in the GEPF, know how agents of State Capture were allocated eye-watering amounts from the Pension Fund to invest in newspapers, etoll gantries etc. They continue to watch nervously as huge amounts are taken from the fund that they will have to depend on in their old age. Will the money be stolen, squandered or “invested” in the NHI, the rescue of Eskom, SAA, Transnet or the like?
What is the solution?
What about buying property to let?
Yes, I know that you have heard all the scare stories about tenants who don’t pay, wreck the property etc. It is a risk that can be minimised. Through savvy selection of suitable property, proper vetting of prospective tenants, and engaging good management services, many problems can be circumvented.
What are the benefits of buying to let?
Historically, property has always kept pace with inflation - rentals too.
If you have some money to invest (such as the lump sum many receive, and squander on overseas trips, fancy cars etc, on retirement) and enough to live on currently, rentals received should be adequate to cover any bond repayments, levies, rates, repairs and maintenance etc.
Many of the expenses relating to ownership of rental property are tax deductible. These expenses include repairs and maintenance, rates and levies, interest and bank charges on bonds, legal costs, management agents’ fees etc.
When the bond over one property is significantly reduced, it might be possible to borrow against it for the purchase another. Your property portfolio will increase, your income will increase and your nett worth will increase. All highly desirable outcomes.
Many people, who are comfortably off in their latter years, have followed this plan successfully. You could too!
Writer : Beverley Chadwick
