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How to future-proof your retirement plans

Will your retirement savings generate enough income down the track?
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Will your retirement savings generate enough income down the track? That’s the big question, and unfortunately, one that is not asked nearly often enough. Here are some key things to consider.

We live longer on average

Just like most of the developed world, the New Zealand population continues to age, putting pressure on NZ Super and retirement planning. According to official stats, by 2036 around one in 4.5 New Zealanders will be aged 65-plus – a 77 per cent increase from 2016.

At an individual level, it’s important to budget for a long, happy life, to ensure your retirement savings last as long as you need them to.

Make sure you have an idea of what your actual nest egg may look like well ahead of time. This way, you can think about ways to boost it and make the most of what you have. For example, to stretch money further, some people choose to work for a few more years after they turn 65, perhaps on a part-time basis.

Now to the key question: how much do you need?

As you can imagine, there’s no one answer to this question. How much you’ll need in retirement depends on the lifestyle you’re envisioning.

The key thing to know is that – no matter how frugal that lifestyle might be – NZ Super alone is unlikely to be enough to fund it. So the earlier you start investing in your retirement plan, the better off you’re likely to be when your golden years come around.

First, try to put down an estimate of how much you may need, factoring in your everyday expenses and remaining financial commitments, as well as any recreational activities you may enjoy doing – like travelling, eating out, or your favourite hobbies and sports.

Remember, you’re working hard to achieve financial security in your post-work life, and having some fun is as worthy a goal as most.

Focus on entering retirement debt-free

When planning retirement, focusing on repaying debt in full is also crucial. The more you pay down, the more disposable income you’ll have available – and for a longer time, too.

One of the biggest debts you may have is your mortgage, so depending on your time horizon, putting a plan in place to pay off the home loan while you’re still working is the way to go. Talk to a mortgage adviser about how you can adjust your home loan structure or repayment plan to pay it off faster

Where would you like to retire?

Location, location, location – it’s not just a real estate mantra. For example, the lifestyle you have in mind may entail a white beach and warmer temperatures. Or you may like the idea of downsizing and relocating to a more affordable area, to make your retirement money go the distance.

Wherever you choose to move, don’t just think about your finances, but also about the quality of life your living arrangements are likely to provide.

We’re here to help

At Pension Transfers, we’re here for the long term and provide ongoing advice, reports and guidance. And as you lay out the financial foundations of your after-work life, we can help with regular reviews to assess your risk profile and investments.

Call us on 0800 UK 11 NZ or email askus@pensiontransfers.co.nz to get your future on track.

 

 

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.

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