KIWI SAVE R GU I D E | BO O STE R
PART FOUR: Strategies in Retirement
Your Guide to KiwiSaver Once you reach 65, what should you do with your KiwiSaver savings? Dave Copson, Head of Growth at Booster, provides a guide to help you make your money last.
FIVE WAYS YOU’LL SAVE MONEY WHEN YOU’RE NO LONGER WORKING I’ve had a few conversations with clients over the years where they say, “I need to earn the same amount that I earn now, because that’s what I live off now and it’s a struggle.” Luckily, the situation isn’t as bad as they’re expecting. Usually, these clients haven’t thought about all the ways they’ll spend less once they retire from working. Here are five of the most significant ways you’ll save: 1. Housing. Hopefully your home loan is paid off by the time you retire, which will mean no more mortgage payments. 2. Transport. You won’t be driving to work every day or taking public transport, so your spending on travel decreases. Once you turn 65, you’re also eligible for a SuperGold card, which gives you free off-peak public transport travel, as well as other savings and discounts.
THE FIRST CHALLENGE IS CHANGING YOUR MINDSET During your working life, your entire mindset is focused on accumulation. Building up your retirement funds, growing your KiwiSaver savings, developing your career, spending less, earning more. Then you retire, and suddenly you have to flip the switch on that mindset. You’re no longer bringing in an income. All your income is based on your investments and superannuation. You’re no longer accumulating – you’re decumulating. It can be really difficult to get your head around making this switch. I know that there’s an important story to tell about the many Kiwis who haven’t saved enough for retirement, and I don’t in any way want to diminish their struggles. But there is also a sizeable chunk of the retired population who are financially comfortable and yet feel conflicted or guilty about spending anything. Many of my previous clients, and even my own parents, are probably not enjoying their retirement enough. S P R I N G 2 0 2 2 | I N F O R M E D I NVESTO R 5 6
3. Clothing and food. If you buy your lunch and coffees during your workday, you’ll save a lot when you’re eating at home – it’ll be lockdown food spending again. When it comes to clothing, you’ll also save on work attire, which can be a decent sum if you’re expected to dress smartly in an office job. 4. Insurance. Review your insurances with an advisor. Your requirements change as you get older. Chances are, you can reduce or cut some of those costs when you’re no longer working. 5. Entertainment. Fewer post-work social events usually mean a little less spending on food, alcohol and entertainment.
