Investment property as retirement security

Future pensions will not be sufficient to ensure a decent life – this is one of the most common sentences when talking about Poles’ benefits.

Therefore, it is worth focusing on alternative solutions to secure retirement, including investing in real estate. survey “Are Poles afraid of retirement?” shows that 2/3 of Poles are afraid that their pension will not be enough to meet their basic needs. Such moods are especially visible in people under 25 years of age. More and more people are looking anxiously at their future, as it is estimated that the pension amount of current 20-year-olds may constitute 1/3 of their net salary (according to the OECD report on pension systems in the world).

According to Central Statistical Office estimates, the average pension after deducting average living costs is just over PLN 1,000, but this situation is expected to change dramatically in the future. Low fertility rates, increasing life expectancy and inflation growing faster than the indexation of benefits do not inspire optimism. In 2020, the average pension was less than PLN 2,500 gross.

The European Commission’s forecast for Poland shows that the replacement rate (the amount of the pension in relation to the last gross salary), which was 61.4% in 2016, will drop to 41.4% in 2030, and in 2050 it will amount to 24%, which means that the average retiree will receive less than 1/4 of their last salary. Therefore, it is worth taking care of your future now.


Profitability of purchasing an apartment for rent

The effects of the pandemic, leading to a significant reduction in interest rates, have clearly shown that investing in deposits or other banking products will not bring the expected profits. History shows that real estate is less sensitive to volatility, so it may be the best way to secure your retirement.


Apartment prices have been increasing over the last few years – only in the first months of the pandemic, prices on the primary market increased by 6.5% annually. On the other hand, the dynamic economic situation resulted in lower rental prices. Nevertheless, rental income (even if small) will always constitute a supplement to the pension, and the rental profit is higher than the profit from bank deposits. In such a situation, it is also worth considering short-term rental or taking advantage of the offer rent pooling.

The profitability of purchasing an investment property is determined by the rate of return on the investment, which varies over time and depends on many factors. Assuming a simple calculation and assuming that the value of the property increases on average by 2% per year, an apartment worth PLN 300,000 PLN after 25 years (average loan repayment period), it would be sold for PLN 450,000. The investment property can be rented throughout the entire loan period (also after its end), which will allow you to repay the loan and increase your budget during retirement.

An investment in real estate brings up to 10 times higher profits than an average bank deposit and is currently considered one of the safest forms of capital investment. The value of a property in a good location will increase over time, and proper property management will certainly bring tangible profits.

Investing in real estate is of a long-term nature, so it is worth protecting yourself now.

Like any investment, real estate also involves risks and challenges, but – as history shows – the value of real estate increases, so the right strategy will allow you to achieve a stable source of retirement income.


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