Whether it’s a comfortable three decades away or in a few short years, it’s tempting to put off planning for retirement and facing fiscal reality.
How much of a nest egg we really need can be subjective, varying vastly depending on situations and expectations.
A figure plucked out by a few professionals is $300,000 per person or $400,000 per couple.
And then there are some experts that say we need a million or two to relish our twilight years.
Ironically both can be right. We all have unique needs, dreams, and fates.
- Do the maths
All incoming funds and likely outgoing expenses meld to make the final pot of gold. Calculate incomes from weekly New Zealand Superannuation, other pensions, tenants, boarders, projected KiwiSaver funds and other investments. Will the mortgage be paid off? Will there be lump sums from cashed-up investments such as property or the fine art collection? Whether it’s a flowchart of likelihoods or a list of outgoings and incomings, it pays to put pen to paper and update continually.
Many plan to downsize upon retiring to plump up the pension pot, but when it comes to the crunch, it might be difficult to sacrifice creature comforts. Living frugally in a nicer home might appeal to one, and a humble abode and overseas trips to others.
- Decide on your lifestyle
Some people might be content living off a well-tended vege garden, for others it’s banqueting on a river cruise. Lavish or frugal – or indeed somewhere in between – decide what lifestyle fits with reality, and work toward a healthy dollar sum.
- Expect the unexpected
Unplanned medical costs, helping the children out financially, global events or even new opportunities, being over-prepared brings peace of mind. If forthcoming inheritance is in the mix, be aware anything can happen. Security is planning for the worst case scenario.
- How much to save
The closer we are to retirement, the larger percentage we should be stashing away from our salaries. Invest wisely in purchases that increase in value or will make money. For example, will this latest computer help increase my income? As leisure days loom faster we are more likely to work smarter than harder. Regardless, every little amount will help and it’s never too late.
- The bucket list
Retirement buys the time, but not necessarily the bucks. Wish-lists invariably come with a price tag and they are generally better crossed off early, while we are fit and able. Make a list of the ‘must-dos’, and ‘would like to do’, and ferret away the required funds.
- Get advice from all angles
Take on board all the workable tips from financial advisers, success stories from happy retirees, an accountant who knows your spending habits and online research. The website www.sorted.org.nz has useful advice and current pension rates.
Seeing retirement as an exciting staging of life makes the saving up for the adventure a pleasure.