Preparing for retirement can often feel overwhelming. Especially since you may need $775,450 or more saved up in your KiwiSaver to retire comfortably!
It doesn’t have to feel stressful though. Here’s one way to make planning easier…break it down to weekly expenses!
Breaking down how much your weekly expenses may be when you retire will make planning less daunting- you won’t have to think of it as one giant lump sum.
To help you start breaking things down, we’ve gathered some handy tips that will get you on the road to planning your retirement in no time!
How much will I need on a weekly basis?
The exact amount that you’ll need weekly during your retirement is totally up to you and your circumstances!
Are you going to live rurally or in the city? Will you be retiring as a couple or on your own? Do you want to live comfortably with money to spend or will you live frugally? Do you have lots of savings already? These are just some of the factors that will impact how much your weekly expenses will be.
One important aspect to remember is that NZ Superannuation no longer provides for retirees like it used to. Nowadays, superannuation is more of a supplementary income rather than something you can solely depend on.
Currently, couples receive $672.22 a week from superannuation and single retirees receive $436.94. According to Massey University’s Fin-Ed department’s yearly report on expenses for retirement, this means that retirees would need an additional income anywhere between $74.59 to $798.04 to be able to meet weekly living expenses.
For the full list of weekly expenses depending on different lifestyles, see below:
(Source: National Capital)
To dive even deeper, we’ve got an example of what Anna and Peter’s (names changed) estimated weekly expenses will look like. They’ve decided to retire in an urban area and will live frugally. Therefore, their expenses match this.
(Source: National Capital)
How do I prepare for this?
When it comes to planning for your weekly expenses during retirement, there are three important things you should think about in preparation.
1). Start planning early! The earlier you start planning for your retirement, the better! You’ll be able to save more and plan for any unexpected factors that may crop up!
2). Think about YOUR situation! Take into account the specific costs that you face. Consider your living arrangements, health-related costs, and any activities you want to do during retirement. Each person’s expenses will be different, so it’s important to think about any unique financial factors that relate to you.
3). Don’t forget about inflation! It’ll definitely impact how much you need to save. To avoid any disappointment, make sure to take inflation into account when planning!
Handy tips for your planning!
Since every person’s situation is different, there’s no financial advice that will be suitable for everyone. However, there are a few tips that you can think about and start applying to your own situation. Here’s some of them!
Evaluate your expenses
Look at your current weekly expenses and figure out which ones will continue into retirement and which ones will stop. As you age, travel and healthcare costs will likely rise while other costs may decrease. Projecting what your expenses will be like in the future will help you plan for retirement.
When will you retire?
Your retirement age will be dictated by how much you can save based on your current income. So you want to start looking early into what your options are. It may be that during retirement you’ll need to earn some form of income, whether that’s a part-time job or something else, in order to support you, alongside superannuation.
The 4% rule
This is not a rule per say, but rather a general guide. It’s a good idea to spend around 4% of your savings each year during retirement. However, this may change depending on the state of the market. During times of volatility like now, you may need to shift your withdrawal habits.
Consider your assets
Making sure your assets and investments are able to keep you living comfortably during retirement is very important. Remember to have short, medium and long term investments to help you through your whole retirement.
Talk to a financial advisor
We understand that planning for retirement can be difficult. To do it solely on your own is very stressful. That’s why we think it’s a great idea for everyone to talk to a financial advisor!
Luckily for you, our good friends over at National Capital will definitely be able to help! National Capital are independent financial advisors that’ll give you great advice. They’ll help relieve your financial worries, allow you to make informed choices and give you confidence in your investments.
To start with, use their FREE online tool Kiwisaver HealthCheck! It collects your information to provide you with tailored advice on which Kiwisaver fund is best for your needs!
Use Money Compare!
Since you’re already looking into your retirement funds, why not check out and compare all your other financial plans too!
The best way to do this is by using Money Compare!
At Money Compare, you can compare all your financial plans! This includes your home loan, car insurance, business insurance, personal loans and much more!
You’ll save heaps of money and find the perfect plan that meets your needs!
Best of all, it’s super easy to use! Just jump on our website, enter in a few details, select filters that match your preferences and then you’ll see all the plans available to you. Then you can compare them all side-by-side on one page!
It couldn’t be simpler!
Alternatively, if you’d rather chat to a friendly human, then give our customer support team a free call on 0508 22 66 72. They’ll help you find an awesome deal!
Retirement is an important part of life that we all need to plan for. So get onto it now! Follow our tips, check out National Capital and compare with Money Compare!
*This is only an educational guide. It is in no means specific financial advice. Please consult a professional financial advisor (like the ones at National Capital) for any specific financial advice you may require.*
