Mind The Gap – A Traveller’s Guide To Retirement Planning
Mind The Gap – A Traveller’s Guide To Retirement Planning
What do travel and retirement planning have in common? At first glance not much, however, whilst visiting the UK recently I was reminded of this saying at the London Tube stations – “mind the gap”. Most visitors to London have heard the words “mind the gap” when travelling on the tube. It’s important as a wrong step may cause an injury when boarding a train whilst travelling about London and beyond.
The rush of air in the tunnels going from one destination to the next can be quite the experience and exhilarating on the first few occasions. It’s a little like looking at your future life after working for several decades and pondering what adventures await me on this platform? Where shall I visit next? What shall I do? Will I have the funds to do these activities or am I planning to be spectator rather than an active participant in this next set of life’s opportunities?
However, unlike the London underground with its maps and well-marked signs, planning for retirement takes a little more foresight. We don’t plan to wake up one morning at a train station with no funds in our wallets to explore the local attractions.
Financial planning allows you to enjoy life at each stage and plan with confidence knowing when you want to stop work, the retirement income gap challenge is settled.
Let’s focus on the existing known income numbers for NZ citizens for a second:
|
NZ Super (post tax) Annual. |
2019 Rates |
Desired Income |
The Gap |
|
Single |
$21,380 |
$60,000 |
$38,620 |
|
Couple- Both Qualify |
$32,890 |
$100,000 |
$67,107 |
Pictorially it may look like the graph below; which in this example shows a positive outcome for the clients living expenses over the next 20 years. Does your graph look equally as positive?
Example of a lifetime cashflow forecast*
*Projections above are based on following assumptions;
Desired Income; $60k drawings age 68-78, including NZ super orange line
Desired Income; $50k drawings age 78-88 including NZ super orange line
Here are some questions to consider with your financial adviser to make sure you are on track for your retirement income:
- Am I investing enough now for the income I desire when I stop work?
- If I had a $200k unexpected life expense would this impact my capital and future income and life plans?
- Could I take time off business and work for 6-12 months if I chose, to achieve a personal goal or help a family member, a friend or an organisation you care about?
- Are the assumptions I/we made 10-15 years ago still the most tax effective for my circumstances?
- If I am buying my first home soon, how quickly can I repay my home loan and provide for what I need in retirement?
- Should I invest in property and if so, what are the risks?
- Am I making the best use of my KiwiSaver contributions?
- How much of a legacy do I wish to leave?
- Does my current insurance protect my life plans and retirement capital sufficiently?
To consider these answers in confidence so you can enjoy life on your terms, without needing to be concerned about an income gap at retirement, give your local Lifetime office a call and speak to one of our advisers to see how your tracking towards your aspirations and your income for life; however near or far retirement may be for you.
Disclaimer: This article has been prepared for the purpose of providing general information, without taking into consideration any particular investor’s objectives, financial situation or needs. Any opinions contained in it are held as at the report date and are subject to change without notice.
Article By Bruce Cameron - Meet Bruce
Bruce Cameron is an investment adviser with Lifetime who enjoys travel and helping clients “mind their gap”.
Unlocking Financial Harmony: Navigating the Symphony of Life with Mindfulness
In the hustle and bustle of daily life, the concept of mindfulness often finds its place in discussions about mental health and stress reduction. However, its impact on financial wellbeing is a hidden gem worth exploring.
A 2021 survey by the New Zealand Retirement Commission ranked New Zealand’s overall financial wellbeing as 61 out of 100. In this case, financial wellbeing is defined as “a combination of meeting commitments, being financially comfortable, and resilient for the future.” The area in which New Zealand scored the lowest was preparedness for retirement, with a 43 out of 100 which highlights that around one in three New Zealanders are concerned that they will not have adequate savings to last through their retirement.
Finding Your Financial Ikigai: The Japanese Art of a Balanced & Purposeful Life
In a world that often measures success in financial terms, the Japanese concept of Ikigai offers a refreshing perspective. Transcending the boundaries of culture and geography, this philosophy loosely translates as "a reason for being". Ikigai is a convergence of what you love, what you're good at, what the world needs, and what you can be paid for. It's an approach that represents a broader view of prosperity, encompassing joy, purpose, and contentment. As financial advisers, we find this particularly compelling. This article delves deeper into how Ikigai can not only enrich your life but also inform your financial decisions for a more fulfilling journey.