Re­tire­ment peace of mind

Element - - Finance -

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.

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