Retirement peace of mind
When retirement looms, most people look at it with a mixture of excitement and trepidation. Financial anxiety can be alleviated with some planning. Begin by preparing a retirement budget. Enter all your expenses for each month and over the year. If you want to do this online, you’ll find worksheets on websites like sorted.org.nz. Next find out how much you’ll receive in superannuation. It’s currently about $15,000 a year after tax if you’re single and $24,000 a year for a couple. However, the amount will depend on your tax rate and circumstances. Information, including current rates, is at workandincome.govt.nz. Tax rates can be found at ird.govt.nz. Once you have an idea of your superannuation payments, compare them with your expenses. The difference is the extra you’ll need to find each year Here’s where it might come from: If you’ve saved a lump sum, how it is going to last and help replace current wages or salary? Investing might suit; the idea is to leave the amount invested untouched and withdraw interest each month as income. If you own a business, you could sell and invest the money. Agreeing to stay to help the new owner get started, even part-time, can increase the sale price and give you retirement income for a while. If you’re mortgage-free, you can use the equity in your home. If you move to a smaller home, you could invest the cash and create an income. Some may also opt for home equity release. Part time work is also an option. Employers recognise that older workers are reliable and experienced. Receiving other income doesn’t affect your superannuation unless your partner is included in your payments because they don’t qualify for super themselves. However, if superannuation is no longer your main (biggest) source of income, it could be taxed at the ‘S’ (secondary income) rate rather than the ‘M’ (main income) rate.