One good financial decision leads to another
business may not produce the same results in the future as would be expected now – things change. If a KiwiSaver contribution can’t be afforded now, when you are working, how will your money look when you retire, if you retire?
The conversation to have with your mortgage or savings adviser, is what would my financial outcomes be doing whatever scenario you propose. That is, what do you need for retirement, based on today’s dollar values. NZ Super on its own won’t be enough to have a few beers, play a bit of golf, take a trip, or shout the family to dinner. Your conversation might be something like, ‘I would like to live on 70 per cent of what I live on now. What do I need to do to achieve that?’ Don’t make retirement planning an afterthought, and don’t just blindly put 4 per cent into KiwiSaver, thinking it will take care of everything. Ask your advisor about comparative funds and what sort of fund is best for you – you might be surprised.
3. You’ve been a good pixie and set up your ‘Kill the Mortgage’ plan, along with an objective based superannuation plan. What happens if the proverbial hits the fan, you have a long term illness, accident, or you die but leave a family? That is the insurance conversation. Trouble is you and I both think the same - it costs money for possibly no return. Mortgage reduction and savings growth, I can see. Insurance is just that direct debit from my account each month. Problem is, ‘what if’. You work hard, you scrimp and save, but would you want to be crippled by disease or accident and see all you’ve worked for disappear before your eyes? Would you like to think your dependents would be not much better off than beneficiaries, if your string is cut short?
A good advisor will be able to offer you comparisons between different insurance companies, revealing their pricing and their product ratings. Some advisors will have ‘special offers’ - for example, we provide health insurance at near cost, saving hundreds if not thousands of dollars over a policy term. The catch is other services must be bought from us. Similarly, other financial organisations may do something similar.
Your financial destiny is not an ad-hoc affair, but a co-ordinated strategy. This may change over time, but sure as rats will eat eggs, if you start with a chosen path, you will start down the path to achieving financial success.
Getting amortgage, planning for your retirement and getting your insurances in order are all linked. Doing some without the others can lead to hardship. It’s better to act now than wait until it’s too late.