3 ways to plan a great retirement (even if you think you’ve left it too late)

There’s plenty of media hype about New Zealanders not planning properly for retirement, especially given our cost of living and expensive housing. Whether your savings are dwindling or growing, here’s some solid money (and life!) tips to confidently plan your best retirement life ever.
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By Alex Brooks

Hands up if you believe 50-somethings are no longer considered  ‘old’?

Keep your hands down if your biggest fear around getting older relates to money and that nagging worry that you won’t have enough to ‘afford to retire’.

New Financial Services Council NZ research shows 94% of Kiwis are worried about financial issues and more than half say the economy has negatively impacted their personal finances.

All age groups say their ability to access a month's worth of income for emergencies has declined and some face tough decisions about whether to heat their homes (24%) or afford essential medications (16%).

But what if you’re older and want to retire (or at least relax more) in the next 5 to 20 years? Here are 3 big ideas to put the stepping stones in place to achieve your dreams.

Idea 1: Ditch debt and dream up how to retire on your terms 

The way people who are 50-something today will retire won’t be the same as our parents. (You possibly don’t have lawn bowls on your wishlist, for example).

The economy, longer life expectancy and more flexible workplaces mean 2 things:

1. Imagining (or reimagining) what ‘retirement’ will mean to us

Does retirement involve more travel, or do you still want to work part-time or even embrace a brand new encore career? 
Map out what an ideal retirement lifestyle looks like for you and start taking the baby steps to get where you want to go. 

2. Being brutal about your money situation (yep, ditch ‘bad’ debt)  

The decade leading up to retirement is a good time to find a licensed financial advice provider to get the right money plan in place for you and your lifestyle dreams.
If you want to retire and live off a combination of NZ Super or KiwiSaver, you have to eradicate debts like personal loans, credit cards or short term ‘buy now, pay later’ schemes that charge you fees and interest. 

Dreaming up your retirement - and having a financial plan to get there - is about other things, too, like:

• looking after your health to stay active, engaged and interested in the world around you
• becoming more confident about money decisions and what’s right for you (including protecting yourself from scams)
• remaining connected to the friends, family and organisations that matter most to you.

Idea 2: get creative to lease or own your own retirement home

If you’re lucky enough to already live in the home you want to retire in, congrats! 

It’s even better if you have paid off most of the mortgage and are on track to be free of loan payments by the time you’re planning to kick back into retirement.

If you still have a frighteningly large mortgage to pay off, your best bet is to focus on paying it down as quickly as possible. Read more about how to do that on Sorted.
For people who don’t yet own a home, you don’t need us to tell you the struggle is real. A Deloitte and Westpac report says home ownership in New Zealand has fallen from 75% in the 1990s to less than 60% today and will fall below 50% by 2048.

Owning or leasing a secure home is an important financial pillar for retirement.

Even if you think you’ve left it too late to buy a home, New Zealand is creating more pathways to help people secure a roof over their head as they age.

For example, the Progressive Home Ownership (PHO) fund offers things like:

• Rent-to-buy schemes: rent from a PHO provider and put aside savings to buy the home over 20 years
• Shared equity schemes: become a part-owner in a home with an approved PHO provider to buy a home over 20 years
• Leasehold schemes: purchase the right to occupy a property for a term like 100 years, where the PHO provider lets you pay a modest ground rent while you service a mortgage.

Read more about different types of home ownership in New Zealand and think creatively about where you might live (can you move somewhere cheaper?) and how you can purchase or lease a secure home to age in place.

Idea 3: Save more to retire the E.A.S.Y way

Money skills don’t come naturally to all of us, especially if we were raised in a house where we were taught we never had enough.

Why not try this E.A.S.Y approach - Earn, Automate, Save and Your KiwiSaver.

E - EARN MORE

The best paid jobs in New Zealand include healthcare, finance, engineering and law, according to Seek - all of them need university degrees, though.

If you want to increase your salary without spending more years in the classroom try simple things like:

• Tracking the financial wins you deliver for your boss so that you can save up all the reasons you’re so valuable (and deserve a salary review!)
• Ask your employer for non-monetary perks like flexible hours or more training to improve your salary, and wellbeing, over time
• Regularly research market rates to check your pay or salary is in line with the job you do.
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A - AUTOMATE YOUR MONEY

Brainstorm automatic processes you can put in place to avoid thinking too hard about (or spending too much) money.

This means doing things like:

• withdrawing spending money at the beginning of each month so you can only spend the cash you have on you
• putting a ‘pay and review bills’ reminder in your calendar
• having regular ‘buckets’ or money ‘rules’ in your online banking to save for unexpected things like birthday gifts, holidays or long term goals.
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S- SAVE AND SPEND LESS THAN YOU EARN

We don’t all need to earn bucket loads of cash to get rich. Most of us just need to be more disciplined about saving.

Experiment with putting savings away every time you’re paid and seeking out better spending, saving or budgeting habits that work for you.

For example, try gamifying your savings to make it more interesting. If you’re saving $20 per week, could you spare an extra 10% to make it a weekly $22 deposit? The following week, can you make it another 10% to make it a $24.20 deposit. By the end of the year this 10% leap each week could add more than $100 to your bottom line.

This percentage increase game becomes more dramatic with larger amounts - if you bump a $100 savings deposit to $110 per week it could grow your money by more than $500 extra per year.

If that idea doesn’t appeal, perhaps go analogue, and try something called ‘envelope budgeting’ or go back to basics and track all your spending. Find what works for you.
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Y - YOUR KIWISAVER 

You likely have a KiwiSaver fund already in place.

Upping your contributions from the minimum 3% to the maximum 10% can deliver some big wins.

On an average $83,000 salary, a decade of contributing 10% to KiwiSaver will deliver 3 times more retirement savings - around $220,000 - compared to the $70,000 you would save on the lower contribution rate. 

Use this KiwiSaver calculator to play around with the numbers and uncover what they might mean for you. Read more about how to make the most of KiwiSaver.

Remember, you don’t pay tax on any money you withdraw from KiwiSaver (only tax on money your investment earns). This makes it a great way to boost your retirement income and get closer to living the dream…