Adviser Master Class - Going the Distance

Case study 2: Helping Karyn’s money last the distance

Retirees are hurting. Stories of financial hardship are regularly in the media. And Lifetime Retirement Income’s own research shows more than half of retirees are regularly dipping into their savings just to get by. For many, even essential costs like council rates are becoming a stretch.

As part of our Retirement Income Case Study Master Class series, we’re exploring real-world scenarios advisers see every day. This month, we look at a familiar and growing concern: retirees worried about how quickly their savings are being eroded just to cover everyday living costs.

It’s in situations like these that the right, robust strategy can make all the difference – and where Lifetime Retirement Income can help turn uncertainty into confidence, both for advisers and their clients.

Meet Karyn

At 72, Karyn* is facing a challenge familiar to many Kiwi retirees - how to make her money last as long as she does.

She’s been desperately trying to bridge the NZ Superannuation/cost-of-living gap by dipping into her savings – over and over again – to pay her day-to-day living costs. 

Now one question is keeping her awake at night: If she keeps this up, will her money see her through?  

Karyn is in a better position than many. She owns her home outright and has $250,000 in retirement savings. But even with these factors on her side, the uncertainty is weighing on her.  She’s on her own and determined not to rely on her children for financial support. She knows they’ve got their own financial challenges to contend with.

Bridging the gap

Karyn wants to sleep better at night. She knows her current approach – drawing down savings on an ad hoc basis – isn’t sustainable and is no plan for the future. It’s unpredictable, hard to manage, and doesn’t give her the peace of mind she’s looking for.

Her adviser understands this and sets out to find a better solution.

Using the income calculator on the Lifetime Retirement Income website, the adviser explores how Karyn’s $250k in savings could be converted into a steady, reliable supplementary income stream. The result is a personalised estimate that becomes part of her Statement of Advice.

Discovering what’s possible

The numbers tell a reassuring story.

Karyn’s $250,000 could generate an initial tax-paid income of $471 per fortnight, on top of her $854 NZ Super payment. Crucially, this income is designed to increase with inflation each year, helping her keep pace with rising living costs.

Instead of guessing how much she can safely spend, Karyn now has a structured plan – one designed to last until age 95.

Over time, her supplementary income grows steadily, reaching approximately $728 per fortnight by age 94.

Behind these projections are carefully considered assumptions, including:

• Expected returns of 5.5%
• Annual inflation adjustment of 2%
• A mortality age for Karyn of 88
• A tax rate of 17.5%
• Adviser remuneration (paid by the Lifetime Retirement Income Fund) of 0.30% p.a.
• Adviser remuneration (paid by Karyn and deducted by the fund) of 0.25% p.a.
• An 80% probability that income remains stable throughout retirement
• Income paid automatically by the fund

Karyn's Annual Cash Flows

Going the distance

What gives Karyn real confidence is that her plan isn’t ‘set and forget’.

Each year, on her birthday, her adviser receives a full review of her income plan. This takes into account the key variables affecting payments – including changes in investment returns, inflation movements, updated life expectancy data and any tax changes. It also provides an updated account balance.

If it’s necessary, her income is adjusted – up or down – to help make sure her money lasts the distance.

A better way to retire

Trying to fund retirement by constantly dipping into savings without a clear plan can be very risky – especially in a volatile environment. Markets change, costs rise, taxes change, and people are living longer than ever before.

For Karyn, moving from uncertainty to structure has made all the difference.

Instead of worrying about whether she’s spending too much – or too little – she now has a predictable income and a strategy designed to go the distance. And she knows she’s unlikely to need to lean on the kids.

Because when it comes to retirement, peace of mind isn’t just about how much you have. It’s about knowing it will last. And then you can sleep better at night.

Try our Adviser Income Calculator today or talk to Chelsea Devlin about a distribution agreement for Lifetime Retirement Income.

*Please note: Karyn is a 'composite' client, representing scenario advisers are likely to be presented with. She is not a real person, nor intended to represent a specific client.