Retirement planning is where you consider your financial situation for when your golden years, among other things.
Are you planning to live with your kids when you retire? Because that’s what people were expected to do once upon a time, and while many cultures still embrace that idea it’s not so common amongst New Zealanders. Once our paid working lives are over, we often want to do our own thing whether it be skiing, relaxing in the garden, visiting the grandchildren or travelling. We live in a world almost obsessed with retirement and all the wonderful things we will do when it comes. Once we reach mid-life we can see retirement on the horizon and we start to think about how well we are prepared for it.
Retirement income in New Zealand has changed quite dramatically over the years. Historically, people were part of extended families and as they aged they stayed within the family, were cared for and shared the family resources. There was no retirement age as such. In the late 1800’s it was found that many people could no longer rely on their family to support them, and the old age pension was initiated by the government of the day.
Subsequent governments required the worker to contribute to a retirement pension throughout their working life, sometimes compulsorily. Employers often had superannuation schemes which both the worker and the employer paid into over the years, for the worker’s retirement fund. This was fine in the days when people would stay in one job for most, if not all of their working life, however these days, with workplaces and even career changes common for most people, such schemes are not so successful. New Zealand Superannuation is available to most New Zealand citizens and permanent residents once they reach the age of 65. It allows them an income and benefits, such as reductions in medical fees, bus fares and many other costs. People are currently guaranteed a weekly income once they reach the age of 65, however these days people are expected to take more responsibility for their retirement income, and not to rely on superannuation as their sole income. Superannuation policy changes regularly and it is sensible to plan for your retirement independently of it.
For those who can afford it, investments in property, commodities and shares are some ways of ensuring a good retirement income. These people can often retire early if they wish, and still receive Superannuation at age 65.
The most recent development in retirement savings is the KiwiSaver scheme. Employees make voluntary contributions to this long-term scheme, and their contributions can be matched by the government up to $1,042 per year. The government also gives a $1,000 kick-start to people joining the scheme, to encourage more New Zealanders to start and keep saving for their retirement.
Contacting MyRefund who can recommend a financial advisor is a good way to clarify your thoughts on this and make the best investments for your future retirement income.
