When saving for a goal it makes sense to have a target to aim for, whether buying a car, TV or even a house. Why is it then that we bury our heads in the sand when we come to saving for the stage in our lives when we want financial freedom and the chance to live a lifestyle unhindered by the needs of workplaces?
Knowing how much your KiwiSaver investment balance is likely to be at age 65, or your planned retirement date is a vital start to the planning process. This is an essential element to deciding if you need to start an additional savings plan to boost your retirement funds.
The cost of running a household varies depending on lifestyle and home ownership. As a guide, we can look to the 2016 Retirement Expenditure guidelines produced by the Westpac Massey Fin-Ed Centre. These aim to give New Zealanders a good indication of the costs in retirement depending on their location and lifestyle.
The No Frills option is a basic standard of living with no luxuries, while the Choices option is based on a more comfortable standard of living. These are a reality check for anyone who feels they can live on NZ Superannuation in retirement. They are also a good guideline for younger people needing to calculate how much they need to save, possibly without the back-up of NZ Superannuation. Superannuation is an area of future political uncertainty, as is being seen in the policies currently being communicated by parties.
2016 Survey NZ Super Gap
One person households No Frills – Metro $25,600 $20,000 -$5,600
No Frills – Provincial $21,900 $20,000 -$1,900
Choices – Metro $39,400 $20,000 -$19,400
Choices – Provincial $40,900 $20,000 -$20,900
Two person households No Frills – Metro $27,300 $30,700 $3,400
No Frills – Provincial $35,300 $30,700 -$4,600
Choices – Metro $57,000 $30,700 -$26,300
Choices – Provincial $52,600 $30,700 -$21,900
(Reproduced from the New Zealand Retirement Expenditure Guidelines 2016)
Boosting your savings for retirement by making regular contributions as soon as practicable will mean that the power of compounding interest will grow your savings quietly over time. It is important that saving funds are reviewed regularly to ensure that the fund manager is consistently a top achiever.
We can help you take control of your retirement planning, show how compounding works and map out a plan for you. Contact Dianne or Annabel on 03 214 6300.
This information is general. A Disclosure Statement is available on request.