Retirement planning tips for late starters

There’s no doubt that retirement planning can be a daunting task, but it’s not as scary as you might think! Taking charge of your financial plan can feel like a huge weight lifted off your shoulders. If you’ve been putting off thinking about retirement and feel a bit behind, take this as your sign to start planning. Here are some tips to get you started and on track for the retirement you desire. 

Look at your existing savings 

Already have savings stashed away or working hard in investments? That’s great! All savings are beneficial and can be put towards your retirement plan. 

But what if you don’t have any savings? Or maybe your savings aren’t where you’d like them to be. That’s totally fine. It might mean you’ll need to be more proactive with them, but every dollar you tuck away is a step in the right direction. 

Make lifestyle adjustments 

A good way to start saving is by monitoring your expenses. Keep a record of everything you spend money on (such as groceries, petrol, housing, eating out) for at least a month. This practice will help you identify areas where you can potentially save. 

You might find that you need to make some adjustments to your lifestyle and reduce spending in certain areas. This doesn’t mean you have to eliminate everything except the essentials, but it does require being conscious of your spending and intentional about your choices. It’s all about maximising what you’ve got, bringing you one step closer to achieving your savings goals. 

Create your plan 

Doing anything without a plan can leave you feeling aimless and frustrated. Retirement planning is no different. Without a clear plan in place, it’s easy to lose sight of the end goal and fall off track. 

Now that you’ve figured out your savings goals and started managing your spending, it’s time to make your retirement plan. Below are some questions to ask yourself when starting out.

•    How much money do I have to spend right now?
•    How much money do I need to save to achieve my savings goals?
•    What should I do with my current or future savings to make my money work harder? 

When planning for retirement, it's important to consider your drawdown strategy. This strategy outlines how you'll withdraw from your retirement savings to generate income throughout retirement. Remember, NZ Superannuation can help supplement your savings withdrawals. 

Investigate alternative income sources 

If you’re struggling with the feasibility of your retirement plan, don’t panic. Retirement planning isn’t just about stashing money away, it’s about thinking outside the box. 

Consider other income streams like part-time work during retirement, rental income, or even leveraging assets like your home. It’s about being resourceful and finding extra ways to make things work.  

Invest appropriately and manage risk 

Is investing the right savings vehicle for you? 
It’s important to make sure your investment strategy aligns with your stage in life and risk appetite. Chat with a financial adviser to make sure you’re heading in the right direction. 

Already kickstarted your investment journey? 
You’re well on the way to maximising your savings. If you’re invested in a KiwiSaver scheme or managed fund, boosting your contribution rate can make a huge difference to the level of savings you’ll enjoy when you retire.  

Never invested before? 
While you might not have as much time for compounding interest to work its full magic, it can still play a role. Even a few years can make a difference. However, with the multitude of investment options available, it can be difficult to navigate the world of investing. One popular approach used by many worldwide is index investing. It’s straightforward and easy to understand, making it accessible for beginners. 

Speak to a financial adviser 

Creating a retirement plan isn’t always smooth sailing, but remember, you’re not alone! A financial adviser can help you create a plan. They can recommend investments, insurance, and other tools that align with your needs, goals, and comfort level with risk. 

Reframe retirement planning 

Thinking about retirement planning can often feel daunting, and it’s completely normal to feel a bit overwhelmed. Remember that everyone’s journey into retirement is unique. For some, retirement may mean a clear-cut transition at age 65, while for others, it’s a gradual shift over several years. There are also those who find fulfilment in continuing to work well into their retirement years. 

What’s most important is that your retirement plan reflects what works best for you, both personally and financially. It’s your journey, and it’s okay to take the time to figure out what feels right for you. 

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