Tag Archives | retirement planning

Countdown to Retirement

Countdown to Retirement

The last few years before you stop working are crucial for setting yourself up for a fantastic retirement. They need careful planning to achieve your goals. Of course, with more people now working past the age of 65 it is not always possible to plan towards a specific retirement date. Here are the most important things to do.

  • Plan towards a date after which you will work by choice and if you are able. There is nothing worse than being forced to work late in life by financial necessity. Health problems or lack of employment opportunities may be barriers to work.
  • Adjust your living expenses downwards over the last few years to gradually bring them down to within what you expect your retirement income to be. If you work past your planned date, you can treat the extra income as a bonus to either spend or save.
  • Review your investments to ensure you have liquidity – that is, the ability to get your hands on money when you need it – and to ensure you have put some money aside into growth investments that will keep ahead of inflation and tax over the long term.
  • Review your life insurance cover. By the time you are retired, health insurance and funeral cover are probably the only personal insurance you need.
  • Review your Will and think about preparing Enduring Powers of Attorney so someone else can take care of your affairs later on if required.
  • Get your house in order, literally. Deal with any deferred maintenance on your home and set up a long term schedule of maintenance for the future so you can take this into account in your plans. If you plan to redecorate your house at retirement, remember that it will be need to be done again ten years later!
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An Extraordinary Retirement

An Extraordinary Retirement

Your retirement years should be the best years of your life. With life expectancy increasing, the average person can expect to live to around 90, so retiring at 65 means you will spend over a quarter of your life not working. You can choose for that period of life to be ordinary; or you can choose for it to be extraordinary.

It is said that whatever a child dreams of being when they are about ten years of age reflects their deepest desires for their future adult life and that these desires stay constant in the subconscious mind throughout life, despite the stresses of living. Thinking back to your childhood dreams is a great way to start planning your retirement. Reflect as well on what have been the greatest moments of joy and fulfilment in your life. These may give you clues as to where your future happiness lies. These could include moments of joy in your professional life as well as your personal life. The activities that you absolutely love doing in your personal life are things that you can plan to do more of. Ask yourself these key questions:

  • What is the one most important thing I want to accomplish in this phase of my life?
  • What kind of person do I aspire to be?
  • What do I want to have more of in my life?

There are many people doing extraordinary things in their retirement – setting up philanthropic organisations, developing their talents as artists, musicians or writers, living in another country either as a visitor or a voluntary worker, living a nomadic life in a campervan or on cruise ships, and even giving up on retirement and setting up new businesses or careers. You only get one chance at life, so make the most of it!

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Top Tips for Your Fifties

FiftyTop Tips for Your Fifties

Whether you plan to keep working after becoming eligible for NZ Superannuation or not, 65 still looms as the defining age for retirement, and it looms even larger in your fifties. Depending on your circumstances, the prospect of reaching 65 can lead to feelings of joy, fear or uncertainty. The ten years before retirement are like the last lap of a marathon race. If you are leading, you could easily trip and fall before the finish line. If you are at the back of the pack, it is still possible to have a surge of energy for a respectable finish.

Power up your savings

How much you save during the last few years of your working life will determine how well you live in the twenty or thirty years of your retirement. Work towards living on whatever your retirement income will be and save the rest.

Blitz your debt

Crunch your remaining mortgage by having part of it floating or as a line of credit, so you can make extra payments without penalty. Put your credit card on ice and use a debit card instead.

Slash your outgoings

If you have no dependents and a good asset base you may be able to cut back on your life insurance. Shop around for the best deals on utilities.

Boost your investments

It’s a myth that all your investments need to become more conservative as you get closer to retirement. Match your investments with the time frame in which you will need to access your capital; conservative for short term, growth for medium and long term.

Plan your dream retirement

The amount of money you need will depend on how you want to spend your retirement. Be clear on your retirement goals so you have a financial goal to make your dream real.

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Retirement Planning for Second Time Couples

RetiredCouple2Retirement Planning for Second Time Couples

Retirement planning is complicated enough for any couple, but when there is a second time relationship involved, there are even more issues to consider. In many cases, for couples coming together later in life after a previous relationship there is disparity of both assets and income. The consequences of the Property (Relationships) Act mean that such couples often start their relationship cautiously when it comes to managing finances, with a clear separation of assets and income. A ‘contracting out’ agreement is frequently the basis for protecting individual assets in the relationship. Bank accounts are either kept separate, with bills split at the time of payment, or alternatively there is a joint account for bill payment into which each partner pays a set amount each payday. Either of these methods works well when both partners are working. Retirement of one or both partners raises the issue of whether assets and income should be combined either in full or in part, particular when there is significant disparity.

To what extent should a working partner support a retired partner? If there is a significant difference in age, should the younger partner retire early and if so, should the older partner provide financial support in order to help make this possible? What happens if one partner can afford to travel and the other can’t? Should investment accounts continue to be managed separately? What rights does the surviving partner have to stay in the family home on the death of the other partner? These are all difficult questions which must be confronted at retirement as they will have a significant income on how assets and income will be managed as part of a retirement plan. The outcome of these discussions may necessitate changes to the ‘contracting out’ agreement, which should be regularly reviewed throughout retirement.

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Plan for a Long Life

Plan for a Long Life

When our great grandparents were born, they could expect to live on average for 55 to 60 years and it was likely they would continue working until just a few years before they died. The introduction of Government pensions was intended to provide a means for those who were too sick or too old to work to live a few short years at the end of their lives without financial worry. Of course, what has happened since then is we are now living much longer and healthier lives. At age 65, on average a man can expect to live another 18 years and a woman can expect to live another 20 years. Around half of retirees will live much longer than this.

Pensions were originally designed to do no more than cover the cost of the necessities of life. It was not envisaged they would have to cover overseas travel, healthcare, buying a new car, replacing the carpets and curtains in the house and so on. NZ Superannuation is around $523 a week after tax for a couple, and there is nothing left over for luxuries. If you are one of the lucky ones who live into their nineties, you will spend around a third of your life in retirement. That’s a long time to live in poverty. As a result, many people are now working for several years after becoming eligible for a pension and if this trend continues it is logical that the official retirement age will increase.

It makes sense when you are planning for your retirement to plan on living for a long time and to work for as long as you feel able. Build up enough funds to last you for at least 20 years in retirement so your final years aren’t spent in poverty. 

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