NZ government superannuation (NZS) at age 65 is a very useful retirement income “foundation”:
- A single retiree - basic living- needs $25,000* pa – NZS $19,500 – shortfall - $5,500 pa.
- A retired couple - basic living need $30,000* – NZS $30,000 – shortfall - nil (in theory)
- A single retiree - comfortable living- needs $40,000* pa – NZS $19,500 – shortfall - $20,500 pa.
- A retired couple – comfortable living - needs $57,000* pa – NZS $30,000 – shortfall - $27,000 pa.
*recent Massey University figures
How much in savings will you need to top up your NZS?
- Single retiree – basic living - will need $125,000 invested
- Retired couple - basic living - will need zero in savings - but it will be basic!
- Single retiree – comfortable living - will need $430,000 invested
- Retired couple – comfortable living - will need $600,000 invested
Downsizing your house – the fallback option
Our last two articles dealt with people who did not have these levels of savings, but they did have quite good houses that could be downsized. Hence they were still able (theoretically) to have a pretty comfortable retirement.
Not guaranteed of course, since no one knows what future house prices will do.
What if you don’t have a lot in savings, & you live in town with low property values, where downsizing is not an option?
Taumarunui, Taihape, Kaikohe, Kaitaia, Gisborne, Waimate, Oamaru, Gore, Westport and many more?
House prices in these areas are commonly around $150,000 to $300,000 and leave little room for downsizing and releasing cash.
After Retirement (before retirement was last week’s article)
If you still have a mortgage, keep working till it is paid off. There are a number of good books around on how to pay it off faster too. Read books on budgeting too, and living on an oily rag, so you are an “efficient” spender.
“How many retired and unhappy men are out there? Ask them. Not only can working delay the onset of age-related diseases like dementia, but keeping mentally and physically active helps you feel younger longer. Working can also keep you socially active and prevents isolation, and provide a sense of purpose.” Author unknown
Working part time after age 65 is obviously the best option, but it’s not always easy to put it together. Who might want you?
Use old skills and work from home e.g. carpenter cabinetmaker motor mechanic.
Sewing and clothing alterations, remedial teaching.
Consulting or doing locums.
Work part-time for people in the farm or business.
Returning to work part-time for your previous employers.
Seasonal work - e.g. fruit picking and associated jobs.
Managing a business for someone who works seven days a week and needs a break.
Sell your house and buy two units – than one and rent out the other.
No doubt there are dozens of options I have not thought of.
Rent out your house and do live in property management.
Operate a bed and breakfast from your home, but don’t over estimate how much you will make, as you will have plenty of competition.
Subdivide your property - don’t be put off by your local council and their silly rules.
Sell your house and buy two units – live in one and rent out the other.
Alter your garage or shed into a sleepout and collect rent.
Rent out your spare room.
NB Don’t spend a cent till you know the costs beforehand!
Work together with your children. You can put a cottage or granny flat on their property, preferably one with wheels so it can be easily moved if things change. I know of one lady who moved her granny flat every six months between her 3 children.
Asian and Indian families seem to be much better at family co-operation than Kiwis, and it must work, since I see a lot of Asians driving Mercedes, BMWs and Audis. Ask them, I often do, and many are quite forthcoming.
Don’t get over anxious
A lot of people manage to have a good retirement on not much. However, there is nothing like knowledge and action;
- Be prepared to be unconventional
- But don’t take big financial risks either
- Ask older people how it worked for them
- Ask everyone for ideas
- Read and read and read
- Get advice and review your situation annually – yes, annually
- Use a notebook and add up your total assets quarterly
- Then deduct all debt to calculate your nett assets
- Either you will feel good, or it will spur you into action
- Remember you won’t live forever
Supplied by Alan Clarke, financial & retirement adviser, & author.
His 2nd book “The Great NZ Work, Money & Retirement Puzzle” is now available.
Alan is an independent authorised financial adviser (AFA) FSP26532.
His disclosure statement is available on request and free of charge.