Retirement is something to look forward to, but ensuring the experience lives up to your expectations requires planning.
These days it is becoming more common for people to work less rather than retire and many pensioners have part-time jobs. However, it is good to be working by choice.
NZ Superannuation is generally
enough to keep you alive from one day to the next but you probably won't have fun if that's all you have to live on.
Retirement savings will allow you to have some luxuries, replace your car, travel overseas and keep your house maintained.
For every $5000 of income you need over and above NZ Superannuation, you will need to have about $100,000 invested, if we assume a return of 2 per cent after tax and inflation and that you will use up your savings during your lifetime.
To make an easy transition into retirement, try to live on your planned retirement income for the last one or two years of your working life, and save the difference between that amount and what you earn.
If you have saved enough to produce an additional income of $10,000, then try to live on around $31,000 before you retire (you may want to add to this figure any work-related expenses like transport costs).
On your retirement, have a general tidy-up of your affairs. Make sure your will is up to date, take care of any other estate planning issues, and consider granting enduring powers of attorney to a relative or friend so they can sort out your affairs if you are unable to because of health issues.
Your solicitor or trustee company will be able to assist with these matters.
Once you've sorted out the paperwork and your budget, you'll be free to enjoy the retirement you've been anticipating.
Liz Koh is an Authorised Financial Adviser. The advice given here is general and does not constitute specific advice to any person. A disclosure statement can be obtained free of charge by calling 0800 273 847.
www.moneymaxcoach.com
