This article is sponsored by AMP.
Planning for retirement can seem a bit like homework. You know it's important and starting early can mean a better result, but with so much going on now it can be hard to find the time and space to begin.
It's no secret we're now living longer than we used to. Age Concern has stated that the average life expectancy will reach 91 years by 2053, meaning that you could be retired for 20 or 30 years. That's a long time to find the money to live on, and just like a homework deadline, as your retirement date looms there can often be a sense of urgency to make sure you've done enough.
To coincide with Money Week, surveys released by the Commission for Financial Capability (CFFC) and the Financial Markets Authority (FMA) have highlighted the fact that many Kiwis are in the dark about how much they will need for retirement and where the money will actually come from.
One survey targeted New Zealanders aged 50 years or more, including those approaching retirement, and those who have already stopped working. Among those in the survey approaching retirement, a little more than half said they had some form of financial plan, however the degree of planning varied.
Of the same group, 42 percent have calculated the regular expenses they would need to cover, but only one in 10 are certain they have enough money saved or invested to enjoy the lifestyle they want.
To enjoy the standard of living you are accustomed to, only relying on NZ Superannuation and your KiwiSaver savings may not be enough. For those that had already retired, a quarter said they do not have the money to do the things they would like.
So where to start when planning for your retirement? You've got to consider things such as where you will live, travel, hobbies, entertainment, children, health, part-time work and much more. With so many variables to consider, it can seem overwhelming.
Start by keeping it simple. Think about what lifestyle you want. The CFFC's first stage of retirement, the 'Discovery' stage (65-74 years), is where you'll want to be doing the things you've always wanted to, as well as doing many of the things you already did. This might include travelling overseas to see family, but how often and what could you afford?
And what standard of living would you enjoy? If you're younger, try imagining your lifestyle five-10 years before retirement and use this as a yardstick as to what you would like once you stop working. No one wants to retire and then immediately have to forgo the things that were possible during your working life.
Being able to generate additional growth and income during the years in retirement can help you do this.
There are a range of tools and resources to use to get yourself thinking about how much you might need. The CFFC and Sorted websites have a host of resources and calculators to get you started. As well as doing the numbers, some people create image boards of the things they'd like to do in retirement.
If it still seems like homework and you're just not sure where to start, talk to a qualified professional such as financial adviser. They can look at your situation and talk through what you'd like from your retirement. But start as early as you can. Don't hand in your homework too late and end up with a result you didn't want.
Disclaimer: Information provided is stated accurately to the best of the respondent's knowledge at the time of publication. It is general in nature and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial product. Readers should seek independent financial advice before making an investment decision.