kiwisaver, investing, retirement

Thinking About Retirement?

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Retirement - will you be busy or bored? Sometimes we can’t wait to be retired, but sometimes we don’t want to think about it too much. 

Although ten to twenty years until retirement seems a long way away, these years give you a crucial opportunity to set yourself up for the future. Recently, research by National Capital has shown that three out of four Kiwis are unsure of how much money they will need to retire when the time comes

How much will I need in my KiwiSaver account at retirement?

It makes sense that the sooner you start saving, the better. But we also want to know how much we need in our KiwiSaver account at retirement. This differs for everyone. It depends on personal circumstances and factors such as your retirement time horizon, what sort of lifestyle you want, and where you will live. 

We should also consider the fact that your costs will change throughout your retirement. For example, you may have a higher proportion of costs related to travel or housing in your early years of retirement; and as you get older, you may be spending a greater amount on healthcare.

If you are renting a home instead of living in your own home, you will need more savings to cover the cost of rent, but you also won’t have money tied up to a home. On the other hand, if you own the home you live in, mortgage-free, you don’t have to bear the risk of rent increases or being asked to find a new place. 

Debt-free retirement

Paying off debt in retirement is more difficult, therefore, being debt and mortgage-free by retirement is a great goal. Many retirees are able to manage financially as they don’t have to make mortgage repayments. Moreover, by owning your own home, you are able to have more control over your finances. 

Some downsides, however, is that you will have responsibilities such as taking care of maintenance, insurance and rates. If you leave retirement planning until after you’ve paid off your mortgage, you have the risk of holding your mortgage for longer than you expect if there are potential changes in your circumstances. This may result in a delay in your retirement planning and saving.

KiwiSaver is able to help you with retirement savings while you have a mortgage by encouraging you to make regular contributions to your retirement savings. Making the most out of your KiwiSaver account can make a big difference when it comes to retirement.

Where will my retirement money come from?

Most Kiwi retirees will have two main sources of retirement income, New Zealand Superannuation and their own savings. You may want to take a look at the current NZ Super rates as the pension may help you get by, but it’ll be your own savings that help make retirement fun and comfortable. 

Additionally, NZ Super is paid from age 65 and you don’t have to stop working to get it. Many may continue to work part-time while receiving NZ Super.

Thinking about it?

A survey by National Capital has shown that more Kiwis may be concerned about weight loss than retirement. Even if retirement may seem like a distant blur, the key to a financially secure retirement is a well throughout and personalised plan. A good retirement strategy balances realistic KiwiSaver return expectations and a desired standard of retirement living. A sound retirement strategy may be the difference between two very different retirement outcomes. 

It is understandable that creating a retirement strategy may be a lot to think about. National Capital exists to help take the hassle out of KiwiSaver planning with the goal of helping 1 million Kiwis become financially secure.

So what are your goals in retirement? We want to hear from you and we want to help you. Start by taking National Capital’s KiwiSaver HealthCheck.

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Thinking about retirement? Let us help.

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