How much money do I need to retire?
Retirement is a milestone many people look forward to, but one of the biggest questions is: Do I have enough to retire?
Whether you dream of travelling the world, taking up new hobbies, or spending more time with family, having a clear retirement plan ensures you can enjoy your golden years without financial stress.
Defining Your Retirement Goals
Before determining if you have enough to retire, start by defining your vision for retirement. What does your ideal retirement look like? Here are some questions to consider:
Do you want to travel extensively or stay close to home?
Will you continue working part-time or pursue volunteer work?
Are there hobbies or passions you want to invest in?
Do you want to help support your children or grandchildren financially?
Do you want to do renovations to the home, or downsize/move?
Creating a retirement bucket list can help clarify your priorities. Whether it’s ticking off dream destinations, picking up new skills, or simply having more leisure time, knowing what you want to achieve will guide your financial planning.
How Much Do You Need to Retire?
A common rule of thumb is that you’ll need around 70-80% of your pre-retirement income per year to maintain your current lifestyle. However, the actual number varies based on your individual circumstances. Consider these key factors:
1. Your Expenses
List your essential expenses (housing, food, healthcare, utilities) and discretionary expenses (travel, entertainment, hobbies). Don’t forget unexpected costs like home repairs or medical bills.
2. Your Savings and Investments
Assess your superannuation, KiwiSaver, pension plans, and other savings. The more diverse your income sources, the more financially secure your retirement will be.
3. Your Life Expectancy
While no one can predict how long they’ll live, planning for a long retirement (potentially 20-30 years) ensures you won’t run out of funds too soon.
4. Your Investment Strategy
Your investments should be structured to provide a reliable income while keeping up with inflation. A financial adviser can help ensure your portfolio aligns with your risk tolerance and retirement goals.
Adjusting Your Plan
Life doesn’t generally go completely to plan, and so it’s important to regularly review and come back and reassess your plan over time, to ensure it still meets the needs of you and your family.
Final Thoughts
Retirement isn’t just about having enough money—it’s about having a plan that aligns with your lifestyle goals. By setting clear objectives, assessing your financial situation, and making necessary adjustments, you can ensure a retirement that is both fulfilling and financially secure. Sometimes it is just having a plan in place to give you the confidence to start spending your hard-earned money.
If you’re unsure about your retirement readiness, speaking with a financial adviser can provide clarity and help you create a roadmap for success.
What’s on your retirement bucket list? Let’s make it a reality.
What to have a further discussion about your specific situation?
07 213 2270
Legaseed NZ Ltd (FSP1005404) holds a licence issued by the Financial Markets Authority and provides financial advice in relation to financial & retirement planning, investments, KiwiSaver and personal risk insurance. Our disclosure information can be found on our website www.legaseed.co.nz, or is available on request and free of charge.
