- 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, 0000 – NZS $30,000 – shortfall - $27,000 pa.
How much in savings will you need (in theory)?
- 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
Don’t despair if you don’t have this much saved?
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 live in town with low property values & downsizing is not an option?
Taumarunui, Taihape, Kaikohe, Kaitaia, Gisborne, Waimate, Oamaru, Gore, Westport and many more?
Decent houses in these areas are commonly worth about $150,000 to $300,000 and leave little room for downsizing and releasing cash.
Before Retirement (after retirement next week)
Obviously getting some savings cash in hand before retirement matters. If you are under 65 you should have a KiwiSaver. If not, get one soon.
What else can you do?
If you have a mortgage, seek solutions to pay if off sooner. There are a number of good books around on this issue. Read books on budgeting too, and “living on an oily rag”, so you can pay off your mortgage sooner and then save more.
When saving, do it by automatic payment - you will soon get used to it and won’t miss it.
Working longer – I am not always popular when I mention this but it’s a good option. And how many retired and unhappy men are out there? Ask them.
Working part time after age 65 is obviously the best option, but true, it’s not always easy to put it together.
So whilst working, foster alliances with people who might need some help.
Then after age 65 hopefully you can work part-time for these people. Farmers, business people, your previous employer, someone who works seven days a week and needs a break e.g. motel owners.
If not too late, upskill and try to earn more. Maybe it’s never too late.
Subdivide your property if there are buyers for sections. Don’t be put off by your local council and their ridiculously long list of 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. Don’t live together but two dwellings on one property can have advantages. Think it through carefully though, and discuss any potential fishhooks openly. When and if you are sure it will work, draw up a comprehensive agreement, including exit clauses for all.
Asian and Indian families seem to be much better at this than Kiwis, and it must work, since I see a lot of Asians driving Mercedes, BMWs and now Audis too. Ask them about it, I often do, and many are quite forthcoming.
Other Income for women
Operate a bed and breakfast from your home.
Mothers of very young children who work full time often need help – or their employer needs casual staff when they are off work minding sick children.
And no doubt there are dozens of options I have not thought of.
Don’t despair, but do take action;
- Think outside the square
- Ask older people how it worked (or not) for them
- Ask everyone for ideas
- Read and read and read
- Get advice annually – yes, annually
- Before and after retirement – yes, before and after
- 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
- Never despair, the amount you will need is not unlimited
- And you won’t live forever
Next week – After Retirement
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.