What’s involved in creating a comprehensive retirement plan?

Creating a comprehensive retirement plan is an important step in working towards financial security in your later years. A wellstructured plan addresses aspects of your financial life, aligning them with your retirement goals.

Here’s what’s involved in crafting a retirement plan.

Assessing your financial situation

The first step is to understand your current financial standing. This can involve:

• Income and expenses: Calculate all sources of income and track your recurring expenses to understand your cashflow.

• Assets and liabilities: Determine your assets (savings, investments, properties) and liabilities (loans, mortgages, credit card debt).

• Net worth: By calculating your net worth, it can provide an idea of where you are now and which way you need to go to reach your goal.

Defining your retirement goals

• Retirement age: When do you plan to retire? Although 65 is a common retirement age and the NZ superannuation qualification age, there is no set age for when you should retire. However, the age at which you retire will impact on your savings needs and investment strategies.

• Lifestyle: What is the ideal retirement lifestyle you envision? Will you travel a lot? Pursue any hobbies? Downsize your living arrangements?

• Healthcare needs: You may need to account for potential healthcare costs which often become more frequent age.

Estimating future retirement expenses

Projecting retirement expenses involves careful consideration of:

• Basic living expenses: Expected housing, utilities, groceries, transportation.

• Additional spending: Intended travelling, entertainment, recreational activities.

• Healthcare costs: Insurance, out-of-pocket expenses, long-term care needs.

Calculate your retirement income

Identify all potential sources of income you may receive during your retirement: NZ Superannuation, interest earned on savings, investment returns, withdrawing from your KiwiSaver plan or other investments, rent from another property or asset, or financial support from a family member.

Develop strategies

If there’s a gap between your estimated retirement expenses and your projected income, your retirement saving strategy will aim to address it. These can include things such as boosting your contributions to retirement accounts, adjusting your investment portfolio, or determining any unnecessary expenses.

The strategy determined will be based on your specific situation and aspirations – every individual is unique.

Review and adjust

A retirement plan isn’t a set-it-and-forget-it approach. It’s important to regularly review and adjust your plan to account for any life changes (for example marriage or divorce, new family member, changes in health), economic factors (inflation, market fluctuations), or if your goals have changed (your ideal retirement timeline or lifestyle preferences).