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When Should You Start Saving for Retirement?

When Should You Start Saving for Retirement?

It's a good question and one most of us only think about addressing as we approach retirement age. But that's way too late!

So when should you start saving for retirement? One could say it's never too early and it's never too late. Having a good financial plan for your retirement can set you up for years of enjoyment with loved ones.

Start sooner rather than later

The sooner you start, the better off you will be. Retirement seems a long way away when you are in your 20s so most people delay starting. In fact, an ideal time to set up a tax-deferred retirement account is when you start earning. Just ask anyone close to retirement and they'll confirm this!

If a 25-year old saved $1000 for 40 years and a 45-year old saved $2000 for 20 years (i.e. the same amount of money), the 25-year old would come out ahead because the savings compound over the years.

Why not start your grandchild off with a savings plan from birth by setting up an account which you pay into each year on their birthday?

Super age of eligibility

Currently, the age of eligibility to New Zealand Super is 65 years of age for both men and women. At the beginning of March, Prime Minister Bill English announced his plans for changes to New Zealand Super which would see the age of eligibility progressively increase to 67 years of age.

This would bring NZ in line with other countries such as Australia, the UK, Denmark, Germany and the US.

If this plan comes into effect, only those born on or after 1 July, 1972 will be affected as it would be phased in from July, 2037.

Super payments would still be indexed to the average wage, it would remain a universal entitlement and won't be means tested and you would still be able to access your KiwiSaver at 65.

In light of this recent announcement, many people are thinking ahead to when they retire. As the average life expectancyis increasing by more than a year each decade, New Zealanders are living longer and potentially needing more money for their retirement years.

Current super payments

The current standard net weekly superannuation payment (after tax at "M") for a single living alone is $384.76 and for a couple it's $591.94.

Do you think that would be enough for you or would you like to supplement Super payments so you can enjoy a well-funded retirement or even retire early? You want to make sure your money is working hard for you before you retire so you can reap the rewards when you do stop working.

Adding small amounts consistently adds up in the long run. There will be times when you can pay more and the right savings investment plan will offer flexibility to keep up with life-style changes.

How we can help

At NZ Advice Group, we have access to a range of fund managers to help give options that fit each individual's needs. We monitor plans closely and communicate with our clients to make sure the target amount can be reached.

Reagan and Stacey are Authorised Financial Advisers and will help you reach your savings goals. To discuss a plan for your retirement or to ask questions about KiwiSaver, give Stacey a call on 027 538 1018, 0800 230 235 or email her at