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The 2014 Sanlam Benchmark Survey indicates that only 29% of retirees who have formal retirement plans are able to maintain their standard of living in retirement.

The survey notes that a growing concern is the percentage of average pensioners with a shortfall between their monthly income and expenses that continues to rise (59.2% in 2014, 51.0% in 2013 and 33.3% in 2011). In essence, people have less money to live on at retirement, but are living longer and have significantly greater financial burdens. When asked how this shortfall was dealt with, the pensioners in the core sample mentioned reducing non-essential expenses and cancelling private medical aid to rely on state healthcare.

In an attempt to avoid such a scenario, traditional retirement plans use the Replacement Ratio to evaluate the extent to which individuals can replace their pre-retirement earnings with other sources of income in retirement. For mere survival, the survey recommends a Net Replacement Ratio of around 60%, and around 75% to maintain current lifestyles. However, Average Net Replacement Ratios achieved with traditional retirement plans are currently around a woeful 40% of final remuneration.

“Given this unfortunate situation, it is time to look for alternatives to traditional retirement savings vehicles and discover an option that allows ordinary salary-earning South Africans to create a retirement fund that will ensure they can maintain their standard of living throughout retirement,” comments Dr Koos du Toit, CEO of P3 Investment Group. “This alternative retirement saving plan – buy-to-let property investment – has already worked for thousand of South Africans.”

Buy-to-let property investment allows South Africans to define, without complex calculations, their Net Replacement Ratio at retirement. It then enables them to build up a portfolio of buy-to-let properties, affordably, steadily and responsibly, to achieve this.

“For example, let’s say you want to retire with a monthly passive income equivalent to R25,000 today,” explains Dr du Toit. “To achieve this through buy-to-let property, you would need to acquire just seven buy-to-let properties, each property valued at around R500,000 and each rented out for R5,000 per month. In 20 years’ time, each property – by then fully paid and bond-free – will generate a net monthly income of R10,500 at the standard 8% per annum rental escalation, providing the investor with a total monthly net income of R73,500 per month (the equivalent of around R25,900 in today’s terms).

As an added “bonus”, by 2034, each property will be worth R2.3 million at a conservative capital growth of 8% per annum, and the investor would own a property portfolio with a combined value of R16 million. Furthermore, both the monthly income and the capital value of this portfolio of seven properties will continue to grow year after year, keeping pace with inflation.

But how can ordinary, salary-earning South Africans acquire seven properties in a few years? “Following a tried-and-tested system with built-in risk management strategies, it is actually extremely affordable and quite easy to build a portfolio of buy-to-let properties that will maintain your lifestyle in retirement,” notes Dr du Toit.

Investors do not need a lump sum to invest, because they can obtain a mortgage bond to acquire the buy-to-let investment property. They also do not need a significant monthly investment, because if they have chosen the right property in the right area, the rental income from the property should cover most – if not all – of the monthly property expenses. As the rental increases each year, the property generates an ever-growing monthly profit, which can be used to pay off the bond faster or to fund any shortfall on the next buy-to-let property acquired. In this way, steadily and sensibly, the investor simply duplicates the system to acquire more buy-to-let properties, securing a defined inflation-linked income for retirement, while also earning capital growth on the value of the properties.

“Over the last 10 years, the P3 Investment Group has helped thousands of ordinary South Africans to avoid joining the growing numbers of pensioners who struggle to make ends meet, instead creating certainty of maintaining their lifestyle in retirement. We have done so by enabling them to acquire – steadily and responsibly – a manageable but very profitable portfolio of buy-to-let properties that will produce an inflation-linked income for retirement, as well as capital growth on the value of the properties year after year,” concludes Dr du Toit. “Buy-to-let property investment is a highly affordable investment alternative for South Africans earning ordinary salaries, and it doesn’t require any prior knowledge or experience, or even much time. It can be achieved by simply following a step-by-step system, which you can investigate for yourself at”


  • Steph Brotherton says:

    I cannot see the point of this article. We are already retired people and it is now too late to give us this type of advice. I have a small property that I was advised to let when I had the opportunity to stay at a cheaper accommodation elsewhere. The tenant was a disaster, in spite of acquiring the person via a rental agent, and in the end it cost me money for commission, reconnection of my phone and repairs which the rental barely covered. There is no guarantee that any tenant will be reliable, as even someone with a good income and apparently secure employment may lose their job overnight. it is extremely difficult to evict a tenant who defaults and contracts are not worth the paper they are written on.

    • Marilynh says:

      Dear Steph

      Thank you for your comments, and we are sorry to hear of your tenant experiences.

      Although YEI’s target audience are those who are retired or coming up for retirement, we do have many folk who are not as yet retired and who are regular YEI readers. We also have a good percentage of younger readers who subscribe to the YEI monthly e-Newsletter on behalf of their parents. The advice given in this article is primarily aimed at the pre-retirees and younger readers, although we believe that many of our regular readers will pass this sage advice down to their children and grandchildren.

      Kind regards
      Marilyn, YEI Editor

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