Will you be able to retire when you want to and then go “hard out” and really enjoy your retirement?
You owe it to yourself to be able to!
Will you be in a position to retire when you want to, and what will your 20+ years of retirement look like? You will likely be still very fit and active when you retire, so I’d suggest you would want to be in a position where you can really enjoy the “fruits of your labour” from your years of employment. Why work hard for half your life and then still not be able to afford to enjoy the remaining quarter of your life? Or worse, end up in a financial position where you cannot afford to retire. Thus, having to carry on working when you should be financially free and enjoying life. You owe it to yourself to be financially secure in your retirement years, to be able to retire when you want to, and then to make this time of your life really special!
For most people, the amount you will receive from Government Superannuation will not provide the retirement lifestyle you desire, and deserve. The introduction of Kiwisaver will help those who have taken up the option, but this is only one piece of the puzzle. Retirement may seem a fair while away for you, but the earlier you get started with building your nest-egg the easier it will be to achieve your retirement income goal. I’ve seen a number of cases now where people have left their retirement planning until they’re in their late 50s or early 60s. Unfortunately, most then find out that they will have to work longer and save more in order to have the retirement lifestyle they want.
Start building your retirement nest-egg early!
Due to the magic of compounding returns, starting to "put a little away" now for your retirement years will provide a much larger pool of funds than if you leave it until later.
For example, have a look at the two graphs on the right. The red line shows the result of saving $50.00 per month from the age of 30 (increasing your savings each year by 3% to offset inflation) and investing it at a modest compounding annual net return of 5% until the age of 65 - after which you would end up with a nest-egg of just over $91,000. However, the green line shows you the result of the same starting amount of $50.00 per month, but from age 50 - resulting in retirement savings of only a little over $18,000. In fact, to gain the same $91,000 retirement savings amount from age 50 you would need to start with $250.00 per month - that's five times as much! Starting early and getting into the saving and investing habit certainly pays dividends.
To help you plan your retirement income goals, and develop your saving and investing plans, we've provided a free Simple Plan Generator and Visualiser tool you can use. We use the tool as part of our coaching as it provides our clients with some clarity as to what may be realistically achievable. There are two versions of the tool - a web version that you can use online and an Excel Spreadsheet that you can download and use offline. Please see our Calculators resource page to access it.
Value Prophet - We can help you get ready.
No matter where you are on life's journey, how near or how far away you are from retirement, the team at Value Prophet can help you work out how to achieve the best possible retirement funding outcome. Contact us to get your retirement dreams on track now.
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