Think about funding your retirement

By Jeremy Tauri

Jeremy Tauri.
Jeremy Tauri.

Have you given any thought to when you might want to stop working?

Retirement is a bit of a dirty word for a lot of people. But most of us want, at some stage, to not have to work any more. To do that, we need a bit of money behind us.

At the moment, NZ Super is available to everyone over 65. But the prime minister has indicated that in future decades, that age of eligibility will rise to 67.

It's clear most people will need some money above and beyond what they will get from the Government and working out how much this will be is the first logical step.

So how do you do that?

You can find some calculators online that can give you some indicative figures on what you'd need to have come retirement age. In terms of available options for investment there are a few.

KiwiSaver is an obvious choice for employees because you get a contribution from your employer as well as the Government.

That means you add more than twice the value of your own contributions each year. But if you are self-employed, it's a bit more complex.

It's still worth being part of KiwiSaver. But I'd suggest that you contribute just the minimum amount to get the full government subsidy.

At the moment that's $1042 a year to get $521. That's a 50 per cent return on your money before you even start thinking about investing it, so it's worth having.

Your business may be your retirement plan. Focus on building up its value and maintaining it in the sort of state that would be easy to sell if you wanted to. The proceeds of that sale are also generally tax free.

You might consider buying a rental property. If you can pay off the mortgage by the time you retire.

You could invest in a managed fund or ETF - these operate a bit like KiwiSaver funds but the money is not locked up. This means it is available to you.

- Jeremy Tauri is an associate at Plus Chartered Accountants

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