Ask Paul: I’m renting in my 50s – should I buy a property?

Dear Paul,

I am in my early 50s and a single mother of two adult children in their early 20s, one of whom has disabilities.

I am working in the public service and have just about $120,000 in superannuation. I have around $50,000 in savings. I don't have other assets or investments.

I am still renting but have been pre-approved for a $650,000 mortgage.

I am worried about the financial stress that I could face during my retirement.

Do you think owning a property that has potential to appreciate in value would be a good decision?

I have been considering investing in shares, hoping to have access to some extra money in 15 or 20 years.

But I am not sure how much I will have to invest and if I have enough money now in order to see a meaningful outcome in 20 years. - Anna

Good question, Anna. After some thought, I am taking a deep breath and going to encourage you to buy a home with that pre-approved loan.

In the public service you will have pretty good job security and you have quite a number of years of work in front of you.

You super is a great way to build your wealth while you work, and topping that up with extra contributions should be an effective strategy for you.

In a decade or so, you could use that super to help clear your mortgage and as an income stream. Unlike shares, a home is not counted in the assets test for an aged pension.

I reckon home ownership is the best plan for less financial stress in retirement. I'd make an effort to buy your own home, build your super, and have an aged pension to top things up.

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