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10 signs you're ready for retirement

February 1, 2021

Retirement is a significant milestone, so it’s wise to make sure you’re absolutely ready for it before you take the plunge. While there’s no official retirement age in New Zealand, it’s common for Kiwi’s to aim for retirement at 65 when NZ Super kicks in.

Whether it’s 15 years away or right on your doorstep, when you choose to retire is a personal choice. Here are 10 signs that you might be ready to switch off that morning alarm and make the change into retired life.

couple walking along nz beach together

1. You are financially independent

Being financially independent is arguably one of the most important checkboxes to tick during the retirement planning process. Retirement should be the best years of your life, if you’re worrying about your finances then you may limit your chances to enjoy it.

So, how much do you need to retire? It all comes down to the lifestyle you want. Some studies put retirement lifestyle choices into two categories.

The ‘No Frills’ Retiree

The 'no frills' lifestyle is a modest retirement with limited budget. The no frill retiree will spend around $600 a week in New Zealand cities or around $570 in the provinces if single. For a couple, these figures increase to $898 for city living and $639 in a town.

The ‘Choices’ Retiree

The ‘choices’ lifestyle means you have more money to spend on travel, eating out, clothing, hobbies or other extras. Single retirees in this lifestyle will spend around $1,190 in a city and $830 in a provincial area. For a couple, the weekly cost of this lifestyle increases to $1,436 for city living and $1,135 provincially.

It’s important to think about what kind of lifestyle you’d like in retirement. Perhaps you’d like to do some travelling, or pick up a new hobby, or simply just enjoy life without the weekly grind of work. Whichever you choose, it’s a good idea to have a think about how much you have in retirement savings and if this will enable you to cover all your regular bills and most importantly, live comfortably.

NZ Super is available to most Kiwis when they reach age 65. The pension is currently set at $847 for an individual and $652 each for a couple, paid fortnightly. Without KiwiSaver, even the ‘No Frills’ lifestyle will be out of reach.

If you’re with Kiwi Wealth, our Retirement Goal calculator is accessible when you login to check your KiwiSaver account. This tool will let you know if you’re on track for your desired lifestyle, show you any potential shortfall and make recommendations on how you can fill the gap.

2. You have your affairs in order

While it can sometimes fall into the too hard (or too boring) basket, it’s a good idea to ensure all your affairs are in order before you retire. A simple way to start is to write down a list of any insurance policies you have in place that may be affected once you stop working. These could include;

  • Home and Contents Insurance
  • Car Insurance
  • Life Insurance
  • Funeral Insurance
  • Business Insurance

Some of these covers may not be required once you stop working. Others may need to be changed or increased. Doing the legwork now can help make the transition into retirement that much easier.

Another key part of ensuring your affairs are in order is updating your will. A potentially uncomfortable but necessary task, wills ensure that if anything happens, your assets should go where you want them to. Once you have updated it, make sure the executor of your estate is aware of it and knows where to find it in case anything happens to you.

If the process of making a will seems too complicated, the good news is there are a range of providers with whom you can do it online including Public Trust.

3. You have friends and family to spend time with

grandpa playing with two kids

While it might seem obvious, ensuring you have a support network around you when you retire is extremely important, but it’s often the last thing you think about when the time comes.

There’s nothing wrong with being independent and ticking off some personal bucket list items during your retired years. However, as they say - a journey well shared is a journey well enjoyed.

If you do not have immediate family or friends around you, the good news is that retirement is a great opportunity to meet new people through:

  • Starting a new hobby
  • Travelling
  • Joining a local community group
  • Volunteering 

4. You have reduced or eliminated debt

In the same vein as ensuring you’re financially independent, another key step towards retirement is ensuring that you have minimal, or better still, no debt.

Whether it’s mortgages, credit cards, car finance or something else, it’s a good idea to make sure you have a plan in place to realistically pay it off during retirement. This again comes down to working out your potential retirement income (from NZ Super and other sources such as KiwiSaver) and making sure you can cover all your expenses.

If you’re struggling to clear outstanding debt and the retirement dream seems to be getting further and further away, it might be worth talking to a financial adviser or a budgeting service. They can assist you in making a plan and budgeting to help you reach your retirement goal.

5. You have something else to do, with goals in mind

man fly fishing in lake taupo

All too often, people hit the age of 65 and automatically retire without considering what it means and if it’s actually what they want to do. However, if you’ve been dreaming of a new hobby, volunteering, spending quality time with family or planning adventures, then you might be ready to retire. It may even be that you don’t want to stop working entirely and want to reduce your hours or pick up something part-time instead.

The key is ensuring you’re ready for the next chapter of your life, that you have different ways to keep busy and that you will feel a sense of purpose, whatever it is you choose to do.

6. You’ve planned for emergencies

While you may have planned your retirement down to the fine detail, it’s important to make sure you’re also prepared for those unexpected and challenging moments that life can throw at you.

Retirement isn’t a linear journey. Your spending habits and the financial risks you face will change over time as you get older. Regardless of the emergency, having a plan and a support network in place before you retire can help ensure your retirement years are spent plain sailing.

7. You’ve considered your future living situation

holiday houses in hokianga bay

Deciding where you are going to live in retirement is a big decision and it’s a good idea to plan ahead. Where you live will impact everything from your budget to quality of life.

If you plan to stay put, how is the house looking? Emergency repairs can be costly so it may pay to invest in some pre-emptive maintenance now. Downsizing is a popular option for many retirees so it’s worth considering if moving is an option for you.

Another important factor of your future living situation is your location. Do you have access to facilities like public transport in case you can’t drive? Are there shops nearby and community groups and activities for company if you want it? Retirement villages can be a good option further down the track in retirement if security and health are an issue and are a great way to stay social during your retired years.

8. You are no longer enjoying your job

Many Kiwis choose to work beyond 65 because of financial or even social reasons. However, if you’re financially independent and you feel you’re losing passion for your job, it might just be time to retire.

It’s also important to consider why you’re no longer enjoying your job. If it’s taking too big a toll on your health and wellbeing, work may no longer be appropriate for you and it may be time to move on.

9. Your children are financially independent

Plans to retire can be curtailed by children, especially if you are still supporting them financially or they are reliant on the bank of mum and dad to buy their first home.

If you tick all the other boxes of being retirement ready, it’s a good idea to have an honest conversation with your children about your desire to retire. While the conversation may be difficult, letting them know your plans can help them start to plan ahead and might be just what they need to start becoming more financially independent.

10. You have investments to draw from

The sooner you can put together investments for your retirement, the better your chances of being in a strong position when it comes time to retire.

Most New Zealanders will be familiar with KiwiSaver which through employer, employee and Government contributions allows you to build a nestegg you can access when you turn 65. Any additional income streams to NZ Super and KiwiSaver will only make your lifestyle more comfortable.

Managed Funds are a similar product to KiwiSaver but allow you to deposit and withdraw at any time. They can also be a great alternative to savings accounts or term deposits as long-term they usually generate greater returns.

The difference between investing from the age of 25 versus 45 can mean thousands of extra dollars in the piggy bank. It can be helpful to put your contributions into a retirement calculator to see what sort of income you may be looking at by the age of 65.

Get your KiwiSaver retirement ready

Whatever you’re looking to do in retirement, having your KiwiSaver account set up properly is essential to getting the most out of life. See our tips and advice on how to get your KiwiSaver account retirement ready.

Learn more about Kiwi Wealth's Managed Funds.

Tags: Retirement

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