Alan Clarke: Any age is good to start saving

Plan for your retirement

Is it too late at age 55 to 60? In my opinion, it is rarely too late and always better late than never.

Life being as busy as it is, we tend to put off longer-term issues until they draw ever closer.

So it is with retirement planning. Again and again, I meet people who have left it pretty late to address these issues and plan ahead. Commonly, people glance at it -- it looks too complex or uncomfortable -- and in it goes into the too hard basket:

"I'll look at that next year ..."

"I've got a KiwiSaver scheme, that'll do, won't it ..?" "Government Super will do ..." (but will it? It's only $28,000 a year for a couple)

"I don't ever intend to retire."

Working forever is not that simple, of course, as our health, energy, redundancy, or advanced age may prevent us from working even if we want to.

A COMMON EXAMPLE

I have changed the names and details to protect privacy but here is a typical scenario that I often encounter.

Mary and her husband Bill are 57, he is self-employed and she has a good job. Back in 2012, their children and mortgages finally stopped draining them so they asked their friends what they were doing about retirement savings. All their friends replied; "Nothing, what are you doing?"

So Mary went looking, learning, read my book -- and approached me for some advice.

They had $40,000 lying around and calculated they could save $3000 a month. In January 2013 they invested their $40,000 with us and have been adding in the $3000 each month. Bill had agreed "on the condition that it does not stop me enjoying my annual Bali holiday, regular dinners out and Xmas in Queenstown".

By January this year, they had $128,000 and had averaged a return of over 8 per cent per annum.

My calculations show that they will have $550,000 at age 65 if they continue saving at this rate and assuming a return of 5 per cent net.

Never allow waiting to become a habit. Once you start saving, it is like a ball of snow rolling along, growing ever bigger.

NON-CONTRACTUAL

The savings programmes we set up for people are not contractual, so payments can be started and stopped at any time without penalty.

But of course, the more money you put in, the better the savings plan works.

KIWISAVER

Neither Bill nor Mary had KiwiSaver schemes, but they did have old insurance-based superannuation plans which typically have very high internal costs.

I recommended they transfer to new KiwiSaver schemes in order to access much lower fees, money from the Government, $1000 up front and $10 a week.

There are no employer contributions for Bill, since he is self-employed, so his KiwiSaver won't amount to big money, but Mary will do better as her employer will also contribute to her KiwiSaver.

Large, medium, or small, there are plenty of things that a KiwiSaver can buy at age 65, such as a new roof, new car, new kitchen, paint job for the house, a new hip, a big trip, or a caravan (no, not a loan to your children).

EMERGENCY MONEY

KiwiSaver is locked up until retirement age. However, everyone should have access to emergency cash and not have to sell their home to get it, so we structured Bill and Mary's savings so that it's accessible within 10 days if an emergency occurs.

NOT TOO LATE

* Started at age 55 with $40,000.

* Had over $500,000 at age 65.

* No, it's not too late.

* Even starting at age 60 and getting to $200,000 by age 65, is better than nothing.