I don’t know about you but the older I get the faster life seems to go! Where once retirement was something that would happen when I was really really old, now, well, it’s not as far away as I would like to think, and, truth be told, I’m actually quite looking forward to being retired.
Chances are (statistically speaking) I’ll still be fit and active and able to enjoy life when I retire. I’d like to travel quite a bit and maybe take up a hobby, like gardening. I still want to own a nice house (and in an ideal world even a holiday home), and I’d love for my kids and (as yet imaginary) grandkids to come visit me regularly. All in all, retirement sounds quite nice really. Certainly in my imaginary version of retirement I’m not scrimping and saving every penny, I can afford to take overseas trips and having the family to stay is not a financial burden. However, for many New Zealanders this is not the case.
The fact of the matter is, retirement is expensive. Superannuation from the government is currently $600.30 per week for a couple, and there is no guarantee that it will still be there when we all come to retirement age. With the national median for rent (excluding Auckland) is $395 per week by the time bills are paid and food is on the table there wont be a huge amount left over, and if you’re living in Auckland it’s even harder.
The advent of KiwiSaver has certainly helped to shine the light on retirement saving. In a survey conducted by New Zealand Home Loans, 74% of people said that they had a KiwiSaver account and the majority (75%) knew who their account was with.
Of concern though was that only just over half of respondents actually knew how much was in their KiwiSaver account. Using Sorted’s Retirement Calculator a couple who are 30 years old, both planning to retire at 65 and would like an income of $800 p/w when they retire, would need to have almost $220,000 in savings to achieve this (and that’s assuming that they receive the same level of Government superannuation that people do now – which is not a given)
Our ‘golden years’ should be just that, so here are some things you can do now to start setting yourself up for retirement:
Knowledge is power – know how much currently have, how much you will need when you retire and what you need to achieve it. Remember that $800 in 20 or 30 years’ time will probably not buy you what is does now, so take that into account when deciding how much you need.
Plan – put a plan in place to achieve what you need, don’t just leave it to chance or the government. Our ‘she’ll be right’ attitude does us a disservice when it comes to retirement. This could include:
o Putting a plan in place to ensure your mortgage is paid off before you retire
o Putting a plan in place to ensure any other debts are paid off before you retire
o Deciding on what sort of retirement you want and how much you need to achieve this
o Know how much you need to save each pay check to achieve your goals
KiwiSaver – KiwiSaver provides one of the best returns on investment because for the money you put in as your employer must also contribute a certain amount as well. For best results:
o Ensure you are contributing an amount that means that your employer is contributing the maximum amount they can/will.
o Check which KiwiSaver fund is best for you. Some of the riskier funds can provide the best returns so if retirement is still a way off for you this can be a great idea.
o Know your balance. Keeping a regular eye on your balance keeps it front of mind and makes sure you know whether or not you are on-track to meet your goals
Start Early – the single biggest thing you can do to prepare for your retirement is starting early. The earlier you start saving, the more money you will have come retirement
Here are some more helpful tips for surviving on super from Diana Clement, Money and Careers writer for the NZ Herald
The information contained in this article is of a general nature and should not be taken as advice. It reflects the opinions of the writer only and does not necessarily reflect the opinions of New Zealand Home Loans.