to be paid less," he says.
In the years leading up to retirement, Aucklander Helen and her husband Mike* barely talked about how they'd cope financially once they stopped work.
"Mike has always looked after our finances and he said we'd be okay as we could sell our house, buy somewhere smaller and live quite nicely on the money we made," says Helen.
"We also had some savings, a small amount in KiwiSaver, and we knew we could get NZ Superannuation as well, so I wasn't too worried."
However, by the time they retired from their retail and hospitality jobs six years ago, those savings had dwindled from contributing to the university educations of two grandchildren and going on the holiday of a lifetime.
Then when they put their large family home on the market, it took a long time to sell thanks to an apartment block being built next door.
Meanwhile, they were chewing through their savings.
Eventually Helen (71) and Mike (73) accepted a house offer much lower than they wanted, then ended up paying more than they'd hoped to for the townhouse they bought.
"In the last couple of years we've gone through money much quicker than we thought, which is scary, especially when you think we could both live for another 20 years," Helen says.
"We had some unexpected expenses associated with the new house, plus the cost of living has gone up. We've really had to tighten our belts. We very rarely buy anything new now, we don't have holidays and we've gone down to one car. I've become strict about things like saving power. We put on extra clothes now, instead of switching on the heating."
Helen regrets not putting more thought into how far their money would go.
"I wish we'd looked into it more and saved more money while we were still working, rather than counting on the house being our nest egg," she admits.
"I should've put extra money into KiwiSaver. Now I'm constantly stressing about not having enough."
Helen's not alone.
According to research carried out by the Commission For Financial Capability (CFFC) into women and finances, women think less about retirement, are less likely to have a financial plan and often feel less prepared for this stage of their lives than men.
They also tend to have saved less money, due to taking time off during their career to have children and raise their family, and they have less in their KiwiSaver accounts, often because they haven't had the confidence to move out of a low-earning conservative fund.
They borrow and invest less, but buy more goods on credit, so by the time they retire they're in worse financial shape than men.
Women are also more dependent on the government and NZ Superannuation for their retirement income compared to men, the survey shows.
As a result, women suffer more from stress about finances and can end up struggling to sleep, making unhealthy eating choices and missing out on social activities.
Helen can relate. "I don't go out for dinner, or even coffee with my friends, because of the expense – but also because I'm embarrassed to show money's such a worry for us."
Tom Hartmann, who is the managing editor at CFFC and also oversees the sorted.org website, says while it's important that everyone has a retirement plan, women in particular should be encouraged to be more proactive about getting their finances in order and saving as much as possible.
"Often women are on the back foot because they've had career interruptions with their family and because they tend
to be paid less," he says.
to be paid less," he says.
"It's important to get money working for these women because it gives them more independence and a greater power base.
"Also, when you're constantly worried about money it puts you under a lot of emotional strain. It can then be hard to make good financial decisions – or any other kind – because you are stressed.
CFFC has come up with six steps designed to help people get their finances in order so that they're better placed when they stop working...
Build up an emergency fund
"Put $800 to $1200 together as a safety net," says Tom. "This goes in a bank account only to be touched in an emergency."
This money is there to cover unexpected expenses such as dental treatments or car problems. If you haven't prepared for these, you can end up paying for them by credit card, and "that can be the gateway to more debt, making things much worse."
Pay close attention to your Kiwisaver
Sort out your KiwiSaver. Not only should we all have one, but we should be making sure we're getting the best out of it.
"A lot of people defaulted into a KiwiSaver fund picked by the government and haven't looked into it since. They could be making a lot more with a growth fund, but they're stuck in a conservative one. Changing your settings could mean the difference between tens of thousands of dollars – or even over $100,000 if you've got a long way to go 'til retirement."
If KiwiSaver bamboozles you, you may want to talk to a financial consultant about your fund, or else sorted.org has a guide to what the different funds mean.
Get debt under control
Tackle your high-interest debt. This usually means everything other than your mortgage, such as credit cards and hire purchase agreements. You may be forking out huge amounts in interest that could be put to much better use.
If you have multiple high-interest debts, you can tackle them one of two ways. The first, known as the avalanche method, is to first start paying off the debt that's costing you the most interest.
"Mathematically, it makes a lot of sense to do this, but if it is a very big debt you may not feel like you're making any progress,"
Tom says. "We find a lot of people are better at paying off debts if they start with the smallest one they have because they will be able to pay that off faster and it feels like they're getting somewhere. This is called the snowball. You should choose the method that works best for you."
Invest in insurance
Get insurance to cover what's important to you – your loved ones, your income and your possessions. If the unexpected happens and you're not covered, it could leave you in a precarious position financially when retirement rolls around.
If you don't see the value in insurance, put yourself in a 'what if?' situation. What if your partner died? Could you pay all the bills on your own? What if you lost your job? How long could you last before you got in serious financial trouble?
A good exercise to do is to take your annual salary and multiple it by the number of years you have left in the workforce. This is the minimum amount – it doesn't take pay increases into consideration – that would slip through your fingers if you couldn't work again for some reason.
"Our earning power is our biggest asset and deserves to be protected," says Tom.
He recommends talking to an insurance advisor about getting the right protection as insurance can be very complex. If you already have insurance, it can be worth talking to an advisor as your policies may no longer suit your needs.
Work out how much you will need for retirement
Once you've put these other steps in place, it's time to think about retirement and how you're going to be able to afford to live once you no longer bring home a wage.
"NZ Super is a national treasure and it keeps many people out of hardship, which is a great thing. But the current amount of $411 a week for individuals living alone is not going to be enough for some people. The key is to estimate how much more you think you will need and work out how you will fill the gap. Will KiwiSaver do it? Will selling your property?
"Obviously the earlier you can start putting money aside the better, but the other thing to remember is that it's never too late. Don't think, 'We've left it too long; there's no point in doing anything now'. The idea is to get everyone in the best possible position they can be in. No matter where you start, you can always do something to better your position."
Set short, medium and long-term financial goals
Set goals. Once everything's in place, think about your short, medium and long-term goals.
Start with short-term ones – for example, going on an overseas holiday next year. Medium-term goals could be getting the kids through university. Longer-term ones might be paying off the mortgage before retirement, then looking at what you'd like to be able to do once you've retired, such as travelling.
Once you've identified your goals, it's easier to work out how you're going to afford them and put plans in place.
Planning is key to financial security, says Tom. It's also crucial to bear in mind that it's not about how much money you earn, but how much you keep.
"I know high-earning people who have huge outgoings, so they don't keep very much of what they bring in. What matters is what you are left with, and then how you make that money work for you to give you the best possible future."
* Names have been changed
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