How to plan for retirement

Planning for retirement is a crucial aspect of financial management that can often feel overwhelming. However, the sooner you begin planning, the better prepared you can be to enjoy a comfortable and worry-free retirement.

In this blog post, we will explore essential steps to help you effectively plan for retirement, based on what you need. Understanding the importance of budgeting and making informed decisions can help contribute to a secure and fulfilling retirement.

1. ​Considerations when setting goals

2. ​NZ Super explained

3. ​How to invest for retirement

4. Kiwisaver explained

5. ​Superannuation schemes

6. ​How to find further advice on saving for retirement

7. ​Other things to keep in mind about retirement

Considerations when setting goals

Setting clear retirement goals can be the first step towards successful planning. You could start by considering the age at which you would like to retire. Do you envision retiring at the traditional age of 65, or would you like to retire earlier or later?

Additionally, think about the lifestyle you desire during retirement. Will you travel extensively, pursue hobbies, or spend time gardening? Consider your life expectancy as well, as you may live well into your nineties or beyond. It's crucial to plan for extended retirement years and the potential need for additional healthcare support.

To help visualise and quantify your retirement goals, consider using MAS’s KiwiSaver Retirement Calculator. This tool can provide valuable insights into the amount of money you'll need to save and how factors such as retirement age, lifestyle choices, and healthcare expenses, can impact your financial planning.

By setting specific goals, you can help to create a roadmap for your retirement journey. 

Your lifestyle

Retirement is not solely about financial planning; it's also about envisioning and preparing for the lifestyle you desire. Take the time to consider how you want to spend your retirement years beyond the financial aspect. Reflect on your passions, interests and activities that bring you joy. 

Think about whether you want to engage in volunteer opportunities, join social clubs, or pursue hobbies that you may not have had time for during your working years. Planning for an active and fulfilling retirement can contribute to your overall well-being and happiness. 

Furthermore, consider where you want to retire. Some individuals may prefer to downsize and move to a smaller home or a retirement community, while others may choose to stay in their current residence. Evaluate the cost of living, proximity to amenities and healthcare facilities, and the overall quality of life in different locations to make an informed decision. 

By incorporating lifestyle considerations into your retirement planning, you can create a well-rounded plan that aligns with your financial goals and personal aspirations. 

Estate planning

Estate planning is a crucial aspect of retirement planning that often gets overlooked. It involves organising and managing your assets, properties , and financial affairs, to ensure a smooth transfer of wealth to your beneficiaries after your passing.  

While it may not be the most pleasant topic to discuss, having a plan in place can provide peace of mind and protect your loved ones. 

Consider consulting with a professional for more information. 

NZ Super explained

In New Zealand, there is no fixed retirement age for most occupations, but individuals become eligible for the NZ Superannuation payments from the age of 65. While NZ Super can help cover basic living expenses, relying solely on it may not provide the level of financial comfort and freedom you desire during retirement.  

To enhance your retirement experience, it's important to build your own savings and investments. 

To stay informed about the current NZ Super rates and eligibility criteria, visit the Work and Income website. If you aspire to travel or achieve greater financial independence during retirement, you may need additional sources of funds, such as your KiwiSaver investment.

How to invest for retirement

Another important aspect of retirement planning can be investing. While saving money is crucial, investing in shares or managed investment schemes like the MAS KiwiSaver Scheme, other than just cash or term deposits, can help grow your retirement funds and overcome the effects of inflation over time.

Consider diversifying your investment portfolio by allocating funds to different asset classes such as shares, fixed interest and real estate.

It's important to assess your risk tolerance and investment goals when deciding on your investment strategy. Conservative investors may prefer lower-risk options with more stable potential returns, while aggressive investors may be willing to take on higher risks for higher potential returns. MAS offers a Fund Finder tool that can help you find the right fund for you.

Consulting with a MAS Adviser can provide valuable insights and guidance on investment opportunities that align with your retirement goals. 

KiwiSaver explained

KiwiSaver is a government initiative designed to assist New Zealanders to save for retirement. It offers a structured approach to retirement planning by encouraging regular contributions from individuals, employers and the government. It helps people save for retirement because there are limited withdrawal options until age 65. 

Starting your KiwiSaver contributions as early as possible allows your investments more time to grow and for returns to compound. 

Aside from being a retirement savings scheme, KiwiSaver savings can also be used to purchase your first home. Owning your own home is an important contributor to financial security in retirement.

Explore the various MAS KiwiSaver Scheme options and understand how they align with your long-term goals. 

Superannuation schemes

In addition to KiwiSaver schemes, there are superannuation schemes offered by institutions like MAS. These schemes function similarly to a KiwiSaver scheme, but depending on your circumstances, may provide more flexibility and options.  

For example, the MAS Retirement Savings Scheme offers investors the ability to contribute through an employer-based arrangement, transfer savings from an overseas pension scheme, and can allow investors to access retirement savings at an earlier age than through a KiwiSaver scheme. 

How to find further advice on saving for retirement 

Planning for retirement is a significant financial decision and seeking advice from a professional adviser can be highly beneficial. MAS offers the opportunity to chat with a MAS Adviser at no additional cost, enabling you to gain insights based on your specific circumstances. You can also use the MAS KiwiSaver Retirement Calculator and MAS Fund Finder tool to help.  

A professional adviser can provide valuable information on retirement planning, investment strategies, and risk management, helping you make informed decisions tailored to your needs.  

Other things to keep in mind about retirement

Retirement doesn't necessarily mean the end of personal growth and learning. Many individuals find fulfilment and purpose in continuing education and personal development during their retirement years. Consider pursuing new interests, enrolling in courses or workshops, or engaging in intellectual and creative pursuits that stimulate your mind. 

Explore educational opportunities available in your community, such as adult education programmes, online courses, or workshops offered by local organisations. This can be an excellent way to stay mentally active, expand your knowledge, and connect with like-minded individuals. 

Furthermore, consider the potential for part-time work or volunteer opportunities that align with your interests and skills. These activities can provide a sense of fulfilment, social interaction, and even supplemental income during retirement. 

Remember, retirement is an opportunity to explore new passions, invest in self-growth, and contribute to your community in meaningful ways. By embracing lifelong learning and personal development, you can enhance your retirement experience and maintain a sense of purpose and fulfilment. 

Plan your retirement with MAS

Retirement planning is a crucial step towards achieving financial security and enjoying a fulfilling retirement. By setting clear goals, considering various retirement scheme options, investing wisely, managing healthcare costs, and seeking professional advice, you can take proactive steps to ensure a comfortable and enjoyable retirement.  

Start planning early, take advantage of government initiatives like KiwiSaver, and embrace a holistic approach to your retirement plan. You can explore the MAS KiwiSaver Scheme options and Retirement Savings Scheme offered by MAS, and try the MAS Fund Finder tool that can help you find the right fund for you. Remember, the choices you make today will shape your retirement tomorrow.