Do you think it is too early to start thinking about retirement? Are you more of a ‘live in the moment’ sort of a person? Do you see yourself living the life of your dreams in your golden years? Ask anyone who’s retired, and they will say to start saving for retirement as soon as you can! 

Barometer Money Surveys conducted since 2017 by the Commission for Financial Capability have seen a pattern that New Zealander’s spend without caring about saving enough for the post-retirement years. Over-spending and social pressure has led to the normalization of living in a cycle of consumer debt, especially among people with mortgages.

What is making the Kiwis not plan well?

When you are growing your wealth, time is your friend! The earlier you start saving, the easier it is to secure your future financially. Having said that, it’s never too late to start.

When you are in your 30s and 40s, maximize your KiwiSaver and pay off your debts at the earliest. Make smart financial plans so that you sail through your retirement with ease. It’s good to work as long as your mind and body support, but you shouldn’t overestimate how long you would be healthy and be able to work. Financial planning should be realistic and achievable.

A popular opinion is that people feel if they have a house, they are sorted but end up neglecting the fact that they will require funds to maintain the same lifestyle.

The Barometer Money Survey also inferred that limited knowledge about KiwiSaver is another factor for poor retirement planning. Many of us don’t end up paying attention to the contribution percentage which can help us plan for our later years.

Incomes, planning, and more…

Aren’t we New Zealanders, lucky to have NZ Super? This goes some way to replacing our current incomes in retirement. But that doesn’t cover all our expenses.

According to a study by Massey University, someone with an average income of say $53,000 per annum, who starts saving for retirement at 35 would need to save 11% of their annual income (including any employer contributions) to retire at 65 and continue earning 70% of their prior income.

Kiwis who earn a higher-than-average income, may need to save an even higher percentage. This is because NZ Super will contribute a smaller proportion of your desired retirement income.

Saving 10%, 20% or more of our income may sound like a huge task – and given that the cost of living in New Zealand is high- this may seem difficult. So having the right advice around your KiwiSaver and other investments is crucial.

A few steps for planning your retirement

Start by paying off the debt, little by little

Have short-term and long-term goals to pay off your debt- such as credit card or mortgage. You should aim to pay off these debts as soon as possible and not wait for later years to take care of the same.

What do you think about releasing some equity?

When you are approaching your retirement years, and you have more than one property or other valuable assets, you may find a lot of your money is unusable. During retirement, many consider selling their house and downsizing or moving into a more manageable property. This frees-up up some of your money to be used elsewhere.

KiwiSaver smartness

Through KiwiSaver, you can put money aside for retirement. You choose a percentage of your salary to be deducted and saved with a KiwiSaver scheme provider such as your bank. You can change the percentage contribution according to your life’s financial circumstances.

No two people’s retirement plans are ever identical. Everyone has different goals and plans for their retirement, from thinking about the sort of lifestyle one wants to where you’d like to live, to planning for the unexpected.

We’ve helped many New Zealanders plan within their financial means, so we understand all the things you need to weigh up. With our experience and expertise, you’ll have a plan that’s built to last a lifetime.

Let us know how you found the article and your thoughts and concerns about retirement planning. Leave us a comment and our advisers will get back to you to answer your question.