Are you ready for retirement?
Do you have a solid financial plan in place to create, protect and grow your wealth? What if something unexpected occurred? What would happen to you and your family?
Rival Wealth’s third series examines the nine fundamental steps we believe you need to take to achieve financial health.
Step eight is retirement.
Renee
When Renee joined KiwiSaver a few years ago, she didn’t expect it would be the key to helping her on to the property ladder.
But thanks to its first-home withdrawal scheme, she now has $15,000 to put towards the purchase of a house to call home.
She’s also eligible for a one-off grant from the Government called the KiwiSaver HomeStart grant which will give her a further $5000.
This, along with her KiwiSaver home loan withdrawal, will be paid directly to her lawyer as they will sort out these funds at settlement time.
Renee is now busy searching for a suitable property. She needs to take care that she keeps to her budget and avoids making an emotional purchase. Once she finds the right house, she can look forward to settling into her new life as a homeowner.
In the meantime she needs to continue contributing to her KiwiSaver, as retirement is still the scheme’s main objective.
Top tip: Seek expert impartial advice to make sure your KiwiSaver provider is performing. Your retirement savings are vital – don’t ignore them.
Warren and Judith
Warren and Judith have different retirement schemes. Warren has a substantial balance with his army superannuation while Judith is a member of KiwiSaver.
Now they’ve had a good look at their finances they’ve realised their combined wages are providing them with a substantial surplus of funds that they could be growing instead of spending.
So they’ve decided to start putting $500 per month into a balanced managed fund outside of KiwiSaver. It’s still invested in growth assets but is more accessible when needed.
Judith has also changed the KiwiSaver fund she was invested in as she wasn’t comfortable with its projected range of annual gains and losses.
After completing a risk profile form with her financial adviser she’s discovered she’s a low-risk investor so needs a fund to suit.
Warren has decided to stick with his NZ Army super scheme because they offer numerous investment options as well as the flexibility to make changes. He can also keep contributing beyond his career with the army.
Top tip: It’s important to select which fund is most appropriate for you and your level of risk. This depends on your circumstances, including your age, financial goals and any other savings you have.
Darryl and Christine
Christine joined KiwiSaver when it began in 2007 and thanks to fulltime employment, now has a substantial balance.
Darryl contemplated joining but wasn’t sure if it was worth it being self-employed. He assumed self-employed people could only make annual lump sums into their KiwiSaver and didn’t think he’d be entitled to receiving any member tax credits. He assumed wrong.
Now that he’s realised his mistake, Darryl has signed up and is making small regular payments of $20 per week.
This means he will receive the maximum benefit from the member tax credits of $521.43 per year. What other investment gives you 50 per cent return initially on your contributions each year?
Darryl has taken steps to ensure his employees are also making the most of KiwiSaver member tax credits. He invited an authorised financial adviser to attend a special staff meeting to inform his staff about all the KiwiSaver benefits.
Those who don’t quite qualify for the full member tax credit are going to set up small voluntary contributions so they get the maximum payment.
Top tip: Review your KiwiSaver regularly. Don’t overlook what prescribed investor rate (PIR) you are on as this can affect how much tax you are paying.
Direct questions to Tim Fairbrother at 0800 4 RIVAL (0800 474 825) or www.rivalwealth.co.nz. This information is of a general nature and is the opinion of this authorised financial adviser. This is not intended to be personalised advice. A disclosure statement is available on request and free of charge.