Planning for your retirement

In this section:
Planning for your retirement
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Overview

A person living today has an average life expectency of 85. Most of us are settled into work by 25 - that gives us 480 months in which to save enough money to last us for another 240 months.

'Enough' obviously differs between individuals, but if you want a comfortable life in retirement then it obviously pays to give this some thought, with a fairly clear plan on what you wish to achieve, and the methods that you'll use to do it.

Building up a retirement fund can incorporate many different methods; the State pension, building your assets via your own property, investment properties or a business, investing a lump sum or investing on a regular basis to grow funds over time.


The State Pension

This currently stands at $3,000 per year for a single person, and $4,000 per year for a couple.

However:

The main reason for the introduction of the Kiwisaver plan, is to encourage a higher level of self provision for retirement because State pensions are unsustainable in their current form - mainly due to the changing ratio of workers to retired people.

This is an issue which has been of concern to governments both in New Zealand and the rest of the world for many years. At present in New Zealand there are 3.78 taxpayers to every retired person. By 2020 that figure is expected to be 2.5 to 1 and in 40 years 1.6 to 1.

So what does this mean? 

Simply that the next 20+ years will probably see major changes to the amounts paid on retirement, and/or the age that they are paid. Anybody age 45 or less today would therefore, in our opinion, have to be highly optimistic to think that the state pension will make up any significant portion of their total retirement income - this obviously needs to be taken into account when making your plans.


Kiwisaver

The Kiwisaver plan, although highly sucessful since it's launch in 2007, is still the subject of much confusion and mis-information. As advisers we believe that Kiwisaver represents for the majority of people the single most effective way of building funds for retirement.

See our Kiwisaver section for more details..