New Zealanders prepare financially for retirement in many different ways. It’s not just about saving. Your strategy may be to put all your money into your mortgage and down-size your home before retirement. Saving may also not be the best option for you at the moment – for example, if you have high interest debt you should probably pay that off first.
However, at some stage, saving is likely to be an important part of your plan. And one of the easiest ways to save for your retirement is through a workplace savings scheme. The money comes out of your pay before you see it, so you’re not tempted to spend it on living for today. Your employer may even make a contribution as well, which really makes it worth your while.
One such scheme, which you may have heard a bit about recently, is the Government’s KiwiSaver savings initiative, where you can save 4% or 8% of your salary or wages. KiwiSaver will be available to all employees from 1 July this year – and if you start a new job from this date you will be automatically enrolled.
So how much do you need to save for your retirement? The answer largely depends on the lifestyle you want in retirement.
Things to consider include how long you’ll live, how you expect to spend your time and how much you will need to budget for living costs. The 60plus budget calculator on the Retirement Commission’s free and independent website
www.sorted.org.nz will help you work all this out.
NZ Super will account for some (or even a large part) of the income you will need, but the rest will have to come from other sources, like working or private savings.
For example, a single woman aged 35 wanting $15,000 extra on top of NZ Super each year of her retirement, would need to save $90 each week for the 30 years from now until she reaches age 65.
To find out more about preparing for your retirement, visit
www.sorted.org.nz.
Sorted is packed with information, tools and calculators to help you manage your money.
