How to Generate a Good Passive Income for Financial Security in Retirement

What is the best way to generate a good passive income for financial security in retirement? How much money will you need in the bank? Let’s say you have no other income streams and want $100,000 to live off annually. When you work out the maths, you would have to save (an overwhelming) $10 million! This number reduces if you have an investment property because investment properties provide a passive income.

Read on to learn more about saving and planning for retirement.

What are the Best Income Streams for Retirement?

An investment property is one of the best income streams for retirement (*1). In 2023, the qualifying age for the pension will increase to 67 (from 65)(*2). Furthermore, the maximum rate (as of 2022) that a single person can receive is $1026.50 per fortnight ($24,636 annually)(*3).

As the pension becomes further and further out of reach, many Australians are looking at alternative and more secure income streams for retirement.

Why is an Investment Property a Smart Choice for Generating Income in Retirement?

What Impact Do Low-Interest Mortgage Rates Have on the Value of Cash?


Over the past decade, the Australian cash rate has been historically low. When interest rates are low, the value of cash depletes. As a result, when planning for retirement, it is essential to be prepared for periods when interest rates are low(*1).

One of the flow-on effects of the low cash rate has been a huge demand for dwellings and lower mortgage rates. Based on data from the Reserve Bank of Australia(*4), lower mortgage rates are predicted to lead to higher-valued properties.

What this means for investors and their long-term financial plans is that investing in property is a highly practical way to generate passive income now and well into the future(*1,4).

Why are Investment Properties Worth Considering as a Retirement Income Stream?

1. Tenants pay the mortgage:

Initially, the rent you receive from a new investment property may only cover costs. However, over time, as the loan is repaid, you end up with extra cash(*5).

Example:  You buy an investment property when you are 40 years old. By the time you reach retirement age, a 25-year loan would almost be repaid by your tenants. Depending on the type of property and location, you could be looking at a substantial boost to your monthly passive income.

Best retirement income streams, Investment property for retirement income

2. Tax Deductible Rental Expenses

A range of rental expenses are tax deductible for property owners. According to the ATO, these include(*6):

• Mortgage interest.
• Council rates.
• Capital works, improvements, maintenance, and repairs.
• Depreciating assets.
• Borrowing expenses.

3. Property Value – Long-Term Forecast

The long-term trend line in the property value forecast in Australia is undeniably heading up(*7).

Mentor 1 Property Value Trends Nov Blog 1 Retirement Income Stream

4. Low-Risk Investment

Property investment is generally considered low-risk in comparison to other investment types(*8).
With the right planning and advice, you can set up a long-term financial plan with a range of property investments that will continue working for you well into retirement.

Do You Already Own Property? Calculate Your Equity

Contact the friendly Mentor1 team on 1300 765 811 to discuss your long-term financial goals today.

Best retirement income streams, Investment property for retirement income.



*1. *2. Murphy, T. Investment Property for Retirement - 1 Minute Mentoring. Mentor1 Property. Sydney, NSW. YouTube video. 2022. • Waste Management
*2. Independent Expert on the Question of Human Rights and Extreme Poverty. Australia. United Nations. OCHR. N.d. 
*3. Services Australia. Age Pension: How Much You Can Get. Australian Government. 2022.
*4. Guttmann, R, Lawson, D & Rickards, P. The Economic Effects of Low Interest Rates and Unconventional Monetary Policy. Reserve Bank of Australia. 2020.• Real Estate Signage
*5. MLC. 5 ideas for generating passive income. 2022.
*6. Australian Taxation Office (ATO). Rental expenses to claim. 2022. Skip Bins Oran Park
*7. Lawless, T. The long game … 30 years of housing values. Core Logic. 2022.
*8. Money Smart. Property Investment. Australian Government. n.d. Quality Property Brochure Printing