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Those clever planning types (you know the ones, they’re good at spreadsheets) set the example by getting ahead of the game. But for those amongst us who are more of the creative, 'fly by the seat of your pants type', how do we arrange our finances so we don’t arrive at 65, 75, 85 then wonder how to afford a few teabags and a reasonable haircut?
Each decade or season of life brings an opportunity to get your financial ducks in an organised row, so you can continue enjoying the kind of lifestyle you’ve enjoyed during working years, in your retirement.
To begin the process, it would be helpful to have a dollar figure goal in mind. But considering we’re not given a definite number of years at birth, how on earth do we work out how much we’ll need? Stats NZ Tatauranga Aotearoa’s latest report shows life expectancy at birth has continued to increase. They now project males to live to 86.1 years, and females to 89 years by 2060. In researching this article, I stumbled upon a somewhat grim-reeperish, yet necessary tool which has been created called the ‘How long will I live calculator’ on the stats.govt website. Basically, you enter the year you were born, your age and sex and kazam! There’s your answer, divided helpfully into three categories assuming low, medium and high death rates. You’ll also need to decide whether you’d like to live a no frills or extravagant retirement lifestyle, or sit somewhere in the middle with enough popped aside for the odd splurge if the opportunity arises. It’s really an essential first step for smart retirement planning - overestimate your longevity on the one hand and you could leave retirement too late or live too frugally, but underestimate and you could be low on funds.
Once you’ve figured out your sobering estimate of years left on Earth, and broken down how much you might need, it’s time to write some lists.
Start with jotting down the things that are important for you to do now, and that you’d like to continue doing when you stop paid work. Then - this is the fun bit - add the things you have always wanted to do during retirement. Don’t be afraid to be extravagant at first! That’s what a budget is for. Write down that fancy cruise you’ve always dreamed of. It might mean you’ll have to scrimp and eat a simple diet while you save, or maybe buy second hand a bit more, but keep your end goal in mind and do what you need to do to get to those big ticket items - YOLO (you only live once)!
Where do your dollars and cents actually go?
It’s smart to be organised when spending, to allow for as much saving opportunity as possible.
Think about:
Renewing subscriptions - sift through your credit card statements carefully and check for subscriptions you don’t need, or didn’t even realise you were still paying for.
Planning meals and grocery shopping - regular meals out or last minute takeaways can really impact your pocket. Plan your weekly meals and shop accordingly to save those hangry dashes at the drive thru!
Prioritize paying off high-interest debt - be wary of purchases that offer monthly payments with interest.
Does your spending match your goals and values? - Keep your core values at the forefront. Before you pull out your EFTPOS card, ask yourself if the purchase you’re about to make lines up with what’s really important to you.
Why not earn a few extra bucks?
Around a third of Kiwis continue some form of paid work past age 65. It’s a great way to add a few more dollars to cover your daily expenses, as well as keep some social connection and continue to feel a sense of value. Think about finding an opportunity which allows more flexible hours, part-time or casual work, consultancy or mentoring, and the great thing is, income from paid work will not affect your entitlement to NZ Super.
Your house is an asset
It’s a really good idea to think ahead about where you’re planning to live once you’ve hit the golden age of retirement. If you’ve been living in your family home for some time, selling with the intention of purchasing a cheaper one can free up some money while still providing the benefits of owning a home. If you plan on downsizing and moving to a rural area, keep in mind there are trade-offs - consider your social network and access to health services before committing.
This article is lifted from the New Zealand’s Best Magazine 2024 Edition. For more interesting senior related content, order the latest 2026 issue from www.agedadvisor.nz/Annual-Magazine
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