This episode looks at why property is the biggest threat to your retirement, not because property is a bad investment, but because it often fails to deliver what matters most later in life: income. While property can build impressive paper wealth, the discussion focuses on whether it can actually support the lifestyle people want in retirement.
Why property is the biggest threat to your retirement income
At the heart of the conversation is liquidity. The issue is not about which asset produces the highest long-term return, but which assets can provide reliable income to live on. Property works extremely well during the wealth-building phase of life, particularly when you have strong employment income and time on your side.
Property succeeds largely because of leverage. Using a relatively small amount of your own capital alongside a large amount of the banks money allows the asset value to grow over time. There have also been tax advantages historically, although these may change in the future. However, the growth property delivers often exists only on a balance sheet until the property is sold.
The costs, on the other hand, are very real. Mortgage interest, principal repayments, property management fees, maintenance, and transaction costs all reduce cashflow. This is how many people become asset rich but cash poor. The value of the property might be rising, but it does not automatically translate into money you can spend.
Why property is the biggest threat to your retirement lifestyle
As retirement approaches, the problem becomes more obvious. Retirement requires income. While there is government superannuation, it is unlikely to be enough on its own to fund the lifestyle many people expect.
Residential property, relative to its value, typically produces limited cashflow. A million-dollar property may generate strong rental income on paper, but once expenses are deducted, the actual cash left each week can be surprisingly small. Holding property indefinitely can make you wealthier over time, but if you never sell or restructure, the people who benefit most from the capital gains are often your children, not you.
The episode shares examples of people with multiple debt-free or highly valuable properties who continue working into their seventies due to insufficient cashflow. Emotionally, this is difficult to accept. Property may have created their wealth, so being told it may no longer be the right tool feels counterintuitive, even when the numbers suggest otherwise.
Liquidity matters more than returns
A key distinction is the ability to access money gradually. You cannot sell part of a house to fund a holiday. Selling property involves high transaction costs, timing risk, and market uncertainty. In contrast, diversified investment funds allow small amounts of capital to be accessed over time with minimal friction.
This flexibility means income can be drawn regularly, supporting day-to-day living and experiences, rather than relying on large, infrequent property sales. The conversation reinforces that the debate is not about abandoning property entirely, but about balance and purpose.
Property still has a role, just not in isolation
Property remains an effective tool for building wealth, particularly earlier on when income from work is still supporting day-to-day expenses. The discussion notes that property often works best in a growth phase, where the focus is on long-term value rather than drawing income from assets.
As retirement gets closer, the role different assets play naturally changes. The focus shifts toward how wealth can be converted into usable income, while still maintaining exposure to future growth. In practice, this means thinking about how property fits within a wider mix of assets and how access to capital over time can support lifestyle needs, rather than relying on property alone.
Key takeaways
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Property builds wealth, but it does not automatically produce retirement income
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Many retirees become asset rich but cash poor by relying solely on property
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Liquidity matters more than headline returns in retirement
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Rental income is often low relative to property value once costs are deducted
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High transaction costs make property difficult to access gradually
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Diversified funds allow flexible income withdrawals
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Property should be part of a broader financial plan, not the entire plan
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Strategic sell-downs can fund lifestyle while preserving long-term growth
Next steps
If you have built wealth through property but lack the cashflow you need, speaking with the Lighthouse Financial team about a structured financial plan can help align your assets with the life you want to live.
If you’d like to watch more, check out these other episodes below.
For a no obligation discussion to see how we can help you on the path to wealth, please contact us.
Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
