Are you on track for the retirement lifestyle you’re envisioning? How much would you need to put aside to get there? When it comes to saving for retirement, one size doesn’t fit all. How much you’ll need depends on the lifestyle you’re aiming for, where you’ll live, your expenditure levels, the age you plan to retire, and a lot more.

With so many factors to consider, identifying your ‘sweet spot’ is no easy task. But if your ‘golden years’ are just around the corner, now is a good time to check where you’re at and take action –with the added help of a CERTIFIED FINANCIAL PLANNER^CM professional.

Here are some thought-starter questions to give your retirement savings a health check.

Are you relying on NZ Super alone?

Here in New Zealand, we’re fortunate to have NZ Super, which goes some way to replacing our incomes in retirement. But NZSuper alone is unlikely to fund the sort of lifestyle many retirees would hope for.

As of 1 April 2021, NZ Super pays $437 per week (after tax) for a person living alone, and $672 for a couple (if both partners qualify). Of course, some pension is better than no pension at all, but many people don’t realise that it may not be enough to support a comfortable retirement lifestyle. And according to the latest New Zealand Retirement Guidelines report, it may not even be enough to fund a more modest lifestyle, if you live in a major centre.

So, how much do you need to have saved?

There’s no one answer to this question: everyone is different and has different needs. What we know is that, regardless of where you live or the kind of lifestyle you’re envisioning, there’s a widening gap between retirees’ expenditure levels and NZ Superannuation.

Of course, the higher your expected expenses, the wider the gap you’ll need to close. Also, New Zealand’s lifespan is increasing, so it’s important to ensure that your retirement savings last as long as you.

This is where sound financial planning can make all the difference, no matter how close you are to retiring. Quality financial advice means delving into your financial situation, understanding your needs and life goals, and working with you to get you there. It’s about showing you step by step what you need to do to maximise your chances of success, while also keeping you on track along the way.

What wealth management tools are available?

It’s never too late to gain control of the rest of your financial life. And depending on your situation, there are some wealth management tools to help you with that. Here are some examples to get yous tarted:

KiwiSaver

If you’re over 55 and belong to the scheme, you can give your nest egg a helping hand by aligning your KiwiSaver with your investment horizon and risk appetite. Just like any types of investment, investment in KiwiSaver fund entails some level of risk, and this is reflected in the rate of return you’re likely to receive in the long turn. Generally speaking, the longer you have until retirement, the more ‘aggressive’ you can afford to be.

On the other hand, if retirement age is approaching, you have less time to weather the ups and downs of the markets, so a lower-risk fund may be a good option. Having said that, your investment horizon isn’t the only factor to consider when choosing a KiwiSaver fund: your attitude to risk also matters. Like to know more? Get in touch: as financial planners, we can help you understand your risk profile and select an appropriate fund for your investment needs.

Other investments

Once again, when designing an investment portfolio, you need to consider three risk factors: your need to take investment risk, your capacity to take investment risk, and your risk tolerance. If you’re nearing retirement, you’re likely to have lower capacity to take risk (because a downturn may impact on your hard-earned retirement savings). A diversified portfolio can help you mitigate risk and manage volatility, protecting your wealth. Get in touch to learn more.

Your home

Whether it’s your owner-occupied home or a rental, owning property is a key asset class for New Zealanders. Owning a home means building equity instead of spending money on rent; plus, it can provide your family with financial security and a tangible asset that can be leveraged or passed on to future generations.

To make the most of all this, it’s important to ensure that you reach retirement age mortgage-free. So if you’re 10 years off retirement, and you haven’t paid off your mortgage yet, it can be wise to make that a priority. The earlier you pay off your mortgage, the more you can save while you’re still earning an income. Plus, it can save you thousands of dollars in interest, while also giving the flexibility to downsize your home and free up cash in the future.

Why choose a CFP^CM Professional?

When you’re dealing with the biggest assets in your life – your retirement nest egg, your income, your business, the legacy you leave your children – it just makes sense to seek assistance from someone whose job it is to put you on the right path.

When you opt for a CERTIFIED FINANCIAL PLANNER^CM professional, you’re choosing someone who is at the pinnacle of their profession and has chosen to attain the CFP^CM mark to prove that. It’s the global standard of financial planning excellence, with a structured framework behind it to ensure that you’re getting reliable, trustworthy, comprehensive advice to help guide your financial life.

Source: Financial Advice New Zealand www.financialadvice.nz