Mitigating the risks of illnesses and the reality of retirement planning in NZ.

 

Research last year suggested today’s workers will need to retire as late as 81 to enjoy the same standard of living enjoyed by their parents.

 

Few Kiwis give up work the day they turn 65. Instead they tail off between 60 and 70 with a downward kink in the trend line at 65, thanks to NZ super eligibility.

 

Statistics New Zealand maintains that 600,000 people over 65 (22.2% of the workforce) are employed today compared with 9% 30 years ago.

 

A study by the Commission for Financial Capability found just one quarter of workers planned to retire by or age 65. One in five expected to work beyond 72 and one in 10 thought they would still be working at 76.

 

It’s not all bad, of course. Some in the Ageing Workforce Study released in December 2016, said they were fit and healthy, loved working and didn’t want to stop. WORK UNTIL YOU DROP.

 

If you don’t have KiwiSaver, are you happy with your alternatives?

 

Insurance is another antidote to working until you drop. More working-age Kiwis are disabled by illness than by accident and trying to live on WINZ can devastate retirement savings.

 

Richard Klipin, chief executive of the Financial Services Council , says you never know when the next curve ball will come.

“That’s why having a good Plan B, an insurance plan makes sense because it gives you and your family choices when illness and tragedy strike” he says.

 

Income protection, mortgage protection, and life and trauma insurance can mitigate the financial risks of illness.

 

Many of those who can’t afford to retire are still paying mortgages. The necessity to go on overseas holidays, pay private school fees for over 10 years with one or more children, home renovations and rental property investment mean a greater and longer level of outstanding mortgages for over 60 year olds.

 

For many of today’s workforce, seeing their parents struggle is the first warning sign they need to consider their own circumstances.

 

Planning on quitting at 65?

The average life expectancy for men is 91 and for women it is 94. You’ll need at least $1000 a week to be comfortable.

 

Scenario A– a 20 year old man starting work on $40,000 will need $620,000 on top of NZ Super and KiwiSaver. Start saving $211 every week.

 

Scenario B– 30 year old woman earning $50,000 will need $487,000 on top of NZ Super and KiwiSaver . Start saving $230  every week

 

Scenario C– 40 year old man earning $70,000 will need $465,000 on top of NZ Super and KiwiSaver . Start saving $327 every week

 

Scenario D– 50 year woman earning $85,000 will need $579,000 on top of NZ Super and KiwiSaver. Start saving $709 every week

 

If this is too difficult, then you work until you drop. Longer weekends perhaps, excellent health, other investments and a good positive mental attitude will make the whole process more palatable.

 



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