Retirement Savings – Your Retirement

Providing for retirement is an important part of any financial plan, and it is important to start thinking about it as early in life as you can. The closer you get to retirement age, the more important retirement planning becomes for most people.

In retirement planning you will look at building up sufficient retirement capital to provide you with an income stream for your retirement needs. This part of your plan should also look at any government income support, such as age pension, for which you may be eligible.

An income component of retirement planning is superannuation. If you are an employee, this may include employer-paid contributions and it may also include voluntary contributions.

Your desired pre-retirement and retirement lifestyles also need to be identified as does the potential for high inflation or a recession, two factors which can reduce the spending power of your retirement planning.

New Zealand Superannuation

This is a tax-funded pension available to all New Zealanders in New Zealand who have reached the age of entitlement and meet all residency requirements. The current entitlement age is 65 years.

Some uncertainty surrounds the future of New Zealand Superannuation, as successive governments wrestle with the fact that the proportion of New Zealanders in retirement is steadily rising, while the proportion of people of working age is falling – with obvious implications for a tax-funded superannuation scheme.

How much is it?

New Zealand Superannuation after tax at an M tax code, that took effect on 1 April 2021 are:

Qualifying as	Weekly rate
Single – living alone:	$436.94
Single – sharing	$403.33
Married, civil union or de facto couple (both meet the criteria)	$336.11
Married, civil union or de facto couple (only one meets the criteria and you include your partner in your payments)	$319.47
Married, civil union or de facto couple (only one meets the criteria and you don’t include your partner in your payments)	$336.11

*Source: Ministry of Social Development. All taxed at M code, net rates.

These figures are intended as a guide only. If you are close to retirement and want to know more precisely the level of New Zealand Superannuation you would be entitled to (and information about supplements, overseas pension issues, etc) contact Work and Income on 0800-552-002 or at www.winz.govt.nz.

When should you start saving for retirement?

This one’s easy. You should be thinking about funding life after your career as soon as possible after you start working. Now, in other words!

Lack of time is the biggest problem faced by people saving for their retirement. The longer you delay the narrower your options and the tougher it’s going to be to achieve your savings goal.