16 November 2016

Will retirement be better than working life?

After years of hard slog you've finally retired

You’ve done all the right things – planned ahead, paid off all your debt, saved a nice little nest egg, and preserved your body and mind. You can’t wait to start enjoying the money you’ve saved.

Money and health, it’s all you need, right? Or is there a bit more to it? How do you make sure your retirement is not only happy, but even better than your working life? There’s a few things you can do.

1. Take control

Just because you’re on the bench now doesn’t mean you’re out of the game. This is your retirement and it’s to be enjoyed, not endured!

If you want your retirement to be as rewarding as your working life, you need to take an active role. Start well in advance, make a plan, and stick to it.

Think of retirement as you would a new job, only this time you get to write your own job description and dictate your salary. How much do you think you’ll need and want to maintain your current standard of living?

Undertake some research to help you make an informed decision. The Government’s Sorted website is a great place to start.


2. Don't be afraid to downsize

If things haven’t gone as well as you might have hoped in your retirement planning, it’s not too late. Perhaps you still have debt, your marriage has dissolved, or your business has failed.

As hard as it might seem, it might be wise to downsize. Do you really need such a large house, the cars, the rental, and the bach? Think about disposing of some assets. Simplify your life so you can enjoy it!

In the meantime, maximise opportunities to curb unnecessary spending. Audit your expenses, including all insurance policies. Get a SuperGold Card and take advantage of the discounts it offers. Use the Internet to find the best deals on purchases.


3. Be self-sufficient and enjoy

In 2015 Massey University released its 2015 New Zealand Retirement Expenditure Guidelines. This concluded that “most New Zealanders will need to save through their working lives if they aspire to a better standard of living in retirement than NZ Superannuation alone can support.”

In other words, Super is not enough for most people to live on. A married couple currently receives $591.94 each, every fortnight. This is going to fund basic needs, but certainly not a fulfilling retirement.

Given this, it becomes imperative that savings accrued during your working life are well managed and kept secure for your future. 

While its vital we take care of our children, you’re not doing them any favours funding their adult lives, especially if it’s going to leave you short for your retirement.

Similarly, don’t rely on inheriting money or live in hope that family members will look after you in your old age. Those days are gone.


4. Engineer a steady income

How are you going to transition from receiving a monthly pay cheque to a significantly smaller fortnightly pension payment? And how are you going to protect and control the way you use your savings? It’s a big responsibility and a leading concern for retirees, especially when statistics show we’re living progressively longer.

Lifetime Retirement Income helps bridge this gap by turning your lump sum of retirement savings into a steady, guaranteed income. Let’s use an example. John, a 65-year-old teacher in Taupo earns $75,000 but his superannuation is likely to be just $19,000, a significant shortfall. He has $300,000 of retirement savings but he’s worried that his money might run out before he does. He’s also wary of investing. What if the markets fall and he loses the lot?

John knows that if he wants to enjoy his retirement, he’s going to have to either cut his expenses or top up his income. He’s calculated he can shave $400 per month from his expenses and has chosen to invest $210,000 with Lifetime Retirement Income. He has invested the remainder of his savings elsewhere for rainy days, travel, and running repairs to his home and body. 

His after-tax income payments from Lifetime Retirement Income give him $403.85 every fortnight, for the rest of his life. When combined with his after-tax superannuation payments of $591.94 per fortnight this gives John enough income to fund his retirement lifestyle.


5. This is your time

For some of us, it’s hard to believe that any sort of retirement will ever surpass our working lives. In fact we can’t stand the idea of spending all day with nothing to do. So don’t! New Zealand has 140,000 over 65's still clocking into work[1]. The majority do so because they have to but an increasing proportion continue to work by choice.

There’s no longer the expectation that you’ll bow out at 65, lean back in your rocking chair and quietly ponder the crossword. By today’s standards it’s quite possible retirement for some people could last for as long as 30 years.

For the first time in your life, you have infinitely more choice, potentially no debt, no work demands, and a lot more time: time that has the potential to be incredibly enriching and uplifting.

If you’re more than happy to hang up your boots but would still like to get your hands dirty, there are countless volunteer opportunities where you can use your skills to help others. And then there is an endless array of hobbies, sports, and outdoor pursuits that you’ve never had time for. Perhaps it’s writing your memoirs, or painting, playing golf, or gardening. Whatever it is, find it and love it. It’s your time and you’ve earned it.


[1] Statistics New Zealand