You retire
before
capital, you will either need a very significant amount of money or you will go without in retirement. The day you retire should be the day you begin to reduce the size of your nest egg. If you have more than you need for retirement, consider making gifts to family members or charities while you are still alive – that way you will have the joy of seeing the impact of your gifts.
Plan the timing carefully
Thinking of retiring early? Retiring before you are eligible for a pension significantly
increases the amount of retirement capital you need. You can compensate for this by choosing to live a more modest lifestyle in retirement.
The lower your planned spending in retirement, the less capital you will need and therefore the earlier you can retire.
Choosing to continue to work for a few years after you are eligible for retirement provides a double benefit – you should be able to add to your retirement capital by saving your pension and, by having a shorter retirement, you will need less capital.
It is becoming increasingly common for people over 65 to continue to work either full time or part-time for a few years.
You are never too old to have a KiwiSaver fund
Once you reach 65 you don’t need to cash up your KiwiSaver fund. You can leave some or all of your money in the fund and take it out
when you need it. You can arrange regular withdrawals to top up your pension, or you can make ad hoc lump sum withdrawals for big ticket items.
Some people leave money in a KiwiSaver account as a fund to cover health costs. Or you could leave money there which is earmarked as a bequest for your grandchildren.
There are lots of ways you can use your KiwiSaver fund as part of your investment strategy. If you don’t have a KiwiSaver fund or you have already withdrawn all your funds, you can still set one up even if you are over 65. Just contact a provider.
Liz Koh is a financial planner who specialises in retirement planning. The advice given here is general and does not constitute specific advice to any person.
A disclosure statement can be obtained free of charge from enrichretirement.com.