Retirement - Retire RichRetirement is a lifestyle choice when you have created a passive income, sufficient to support how you want to live. What does retirement mean to you ? Is it about waiting for a magical age to finally leave your "job" and do the things you have always dreamed of doing. The developed countries have aging populations. One hundred years ago life expectancy was 47 years old. In the past people didn’t age they died. Today 12% of New Zealanders are over 65. By 2031 20% will be over age 65 and 10% of the population will be over age 100. With this increase in the average life expectance of at least 90-95 there will be a fear of living too long without financial resources. The present number of years spent in retirement is 20.4. The prediction is that it will become 25-30 years. Will your money last as long as you need it to? At retirement there are 3 sources of income • Personal savings and investment returns • Government Superannuation • Workplace Superannuation Schemes / Kiwi Saver Programme Most of us would like the option of not working past age 65. The only desirable choice is to put our money to work efficiently as possible. After making the commitment to save regularly, the next task is to make that money work as hard as it can on our behalf. Calculate how many paydays you have until you stop working? How much from each pay can you save? What will this grow to if you invest it ? The cost of living in your later years is the greatest expense most people ever face. To support a 25 year lifestyle with an annual net income of $30,000 pa. the lump sum needed ( assuming a 3% return on investment) would be $522,400. Depending on your current circumstances to provide 67% of your current income at age 65 you would need to save the following percentages of your income. Age 30 ..... 12.8% Age 35 ..... 16.1% Age 40 ..... 21.0% Age 45 ..... 28.4% Age 50 ..... 40.9% Age 55 ..... 66.1% Do you notice how waiting 5 years takes so much more of your current income to catch up ? A significant danger facing people once they are out of the work force is inflation, which erodes the true value of income. Later in life folk generally have a higher dependency on fixed incomes and are less able to protect the real value of their incomes (as working folk can through wage negotiations) Preparing for your later years is being able to meet your financial commitments, and maintain an interest to keep your mind and body active. Working with a financial planner can help you put a plan in place to reach the targets that are appropriate for your lifestyle. By signing up for our newsletter "The Vault" you will receive tips and techniques to help you prepare for retirement. Fill in your details below
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