Never, according to research carried out by The Financial Services Council in December 2017, whose report provides a sobering wakeup call for many of us heading towards retirement age.
Most of us envisage passing our twilight years relaxing, indulging in more time for our hobbies and family, and taking well-deserved trips to our favourite holiday spots. But for many retirees, the reality they face is a little disappointing. Rather than relishing the freedom and flexibility of their retirement lifestyle, the report found many retirees are living frugal lives, having been reduced to living off pension payments alone, with little savings up their sleeves for luxuries.
New Zealand superannuation payments are around $600 per week for a couple, and about $400 for a single person. While there’s been regular debate in political circles about raising the entitlement age, it for now, remains at 65. This payment is not means tested, so is the same regardless of your asset base. While this supplement is great, studies have shown that it’s still coming up short for many retirees in supporting a comfortable lifestyle, and they’re relying on their own savings in order to really enjoy their retirement years.
According to Statistics NZ, the average retired couple currently has around $60,000 in savings, however, if you’re hoping to increase your weekly income to $1000 per week (an extra $400), you’d need to have up to $400,000 in thebank to see you through retirement.
That’s a significant chunk of savings, hence the need to consider a long-term savings plan as early as possible, so you can continue to afford the luxuries in life that make it fun and comfortable.
How is it done?
Take some time to work out how much you’d like to live on for your retirement. Once you have an idea of your preferred weekly income (and an estimate on how many years you’ll need savings), you can work out what your regular savings target should be.
If you’re contributing to Kiwisaver, you’re off to a good start. The benefit is that your employer is also required to contribute to your savings, so you benefit from additional savings contributions above what you would achieve on your own.
Establishing your own savings plan is a great first step, but it’s also beneficial to explore ways that you can make your money work harder for you. With the rising cost of living, there’s only so far that your salary can stretch, and therefore your regular savings will be capped. It’s worth considering an investment plan or financial growth strategy which which has the potential to deliver greater returns, so you can reap the benefits of further savings. A qualified financial advisor can help you map out an effective financial growth path that will set you up for the kind of future that you’ve worked hard for.
SurePlan offers a holistic service that reviews your finances from multiple perspectives, to ensure your finances are working for you – today and into your retirement. Find out how we can help you get head – contact us to discuss your financial future.
