Retirement is something to look forward but ensuring that the experience lives up to your expectations requires some forward 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. 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 around $100,000 invested if we assume a return of 2% after tax and inflation and that you will use up your savings over your lifetime. To make an easy transition into retirement, try and 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. For example, if you have saved enough to produce an additional income of $10,000, then try and live on around $31,000 before you retire (you might want to add to this figure any work related expenses such as transport costs).
On your retirement, have a general tidy up of your affairs. Make sure your wills are up to date, take care of any other estate planning issues, and consider granting enduring powers of attorney to a relative or friend, so that they can sort out your affairs if you become mentally incapacitated. 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.
