Real Estate

5 Reasons to Consider Property Investment in Retirement


According to the Motley Fool, 64% of retirees report Social Security as their primary income source. The average Social Security check as of January 2021 is about $1,500. However, the average annual income for people 55 to 64 years old is over $50,000. If you expect to have a $30,000 reduction in retirement income, you might want to check out other ways to make money.

While a Society of Actuaries survey reports only 3% of retirees own rental property, more retirees should consider investing in property. Property investment can be an excellent retirement strategy for many reasons. Here are just five reasons to consider property investment in retirement. 

1. Earn income

One reason people invest in real estate, and possibly the main reason, is to generate cash flow. Property investment income varies greatly by person, state, and property type. However, according to Million Acres, a Motley Fool Service, property investments could earn you anywhere from $21,500 to $121,000 a year on average. 

Rental properties can be a great source of extra income in retirement. Depending on the property, you could double your retirement income. A common unappealing aspect to owning a rental property, especially in retirement, is the property’s management and upkeep. However, you could hire a rental management company to handle all the paperwork while you reap the benefits.

2. Low-maintenance options

If owning a rental property isn’t in the cards for you, investing in a real estate investment trust (REIT) may be something to consider. A REIT is a type of company that purchases income-producing properties, usually commercial properties such as warehouses, golf courses, and apartment buildings. You can invest in publicly-traded REITs, and the company pays out a portion of its profits to you in the form of a dividend. 

REITs are required to pay at least 90% of their income to their investors. This makes REITs a low-maintenance but potentially high reward investment.

3. Build equity

Property investments can help you build equity. Equity, put simply, is the difference between what you owe on the property and what you’ve paid for the property. For example, if you purchase a $100,000 property with a $50,000 mortgage, your equity in that property is $50,000 or 50%. As you pay down the mortgage, your equity will grow.

There are several benefits of building property equity. For example, you can earn a higher profit when you sell a property you have equity in or use your equity to make property improvements, consolidate debt, or make other investments. 

4. Tax advantages

There are several potential tax advantages for property owners. For example, you may be able to deduct mortgage interest, repairs, property insurance premiums, and depreciation from your rental income. The more tax deductions you’re able to make, the lower your tax liability is because you’re lowering your taxable income. 

Another tax deduction many people either forget or don’t know about is their home office deduction. If you have a designated workspace in your home to manage your property investment, you may be able to deduct certain expenses for that home office. 

5. Appreciation

Property usually appreciates, especially if you make improvements on it. If you make a smart property investment and the economy works in your favor, you could turn a profit once you’re ready to sell the property. Also, over time, you may be able to increase rent prices on your rental property to increase your income. 


While property investments aren’t the right type of investment for everyone, they are certainly something to consider. In fact, many of the world’s wealthiest people have one investment strategy in common – property investments. This avenue could be a smart choice for many retirees.

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