Money

Eight ways to prepare for retirement

Preparing for retirement needn’t be stressful if you take the right steps.

By: Donna Fleming

It’s scary how fast retirement can creep up on you. Ask many experts when you should start planning for it, and they’ll tell you when you first start working.

Few of us are that organised, but it is never too late to start thinking about how you will cope when you stop work.

Having enough money to manage financially once you stop bringing home a pay packet is a major consideration, but you also need to bear in mind how your lifestyle will change, and how this will affect you emotionally.

Here are some important points to think about as you approach retirement:

1. There is no official retirement age in New Zealand. You can receive New Zealand Super from 65, and will still get it if you decide you want to keep working.

2. When it comes to working out how much money you need to live on once you stop work, you should take into account the fact you could live for another 20 years, if you plan to retire at 65. You also need to work out what your expenses are likely to be. See sorted.org.nz’s retirement calculator.

3. Try to be as debt-free as possible before you retire. Paying off your mortgage is one of the best things you can do – it will make a big difference to your outgoings. It is also crucial to get rid of high-interest credit card and hire purchase debts.

Make sure you put aside money for your retirement.

4. While you should be doing your best to pay off your mortgage before you stop work, you should also make sure that you are putting money aside for your retirement, for example with KiwiSaver or your own investment fund.It’s not a good idea to leave saving for retirement until after your mortgage is paid off in case something goes wrong and you are only able to save a small amount.

5. If expensive items such as your car, fridge or computer are likely to need replacing soon, do it while you are still earning an income.

6. Plan how you will spend the extra time you have on your hands. It can be easy to get into a rut when you are retired so it is important to have interests that will keep you occupied.

7. A lot of people’s sense of self worth is tied up in their job, and when they stop working, they can suffer an identity crisis. Find activities to do that give you a sense of purpose – try further education or volunteer for a worthy cause.

8. Retirement can also put a strain on a relationship if you suddenly find you’re spending a lot more time in each other’s company. Don’t be afraid to have separate interests and time away from each other to prevent getting on each other’s nerves.

Take a look at how to have a healthy retirement here.

Images: Will Horner/ bauersyndication.com.au. Bauersyndication.com.au