After 38 years of working with my clients one of the things I have learnt is while money is an important component of our retirement planning there is more to it than just funding. It is about understanding that retirement is 7 Saturdays a week. Financial security matters, but retirement is also about purpose, clarity of vision. What is actually important to you and your loved ones?
As we get older, we start to realise that our most important asset is actually time. Time with loved ones and time doing the things that we enjoy doing. Spending time “in our happy place”. A sense of purpose.
The happiest retirees I talk to often have:
- Strong social connections
- Hobbies and passions
- Community involvement
- A healthy routine
- Clear personal goals
A successful retirement is not just about having enough to live - it is about having something meaningful to live for. As a friend of mine often says “it is about living life on purpose”
Retirement is often seen as a distant milestone - something to think about “later.” But for many New Zealanders, later arrives faster than expected. The truth is that successful retirement planning is not about how much money you earn; it is about how early you start and how consistently you plan with regular reviews.
A strong retirement plan usually combines:
- Clarity of vision
- Cashflow analysis
- Emergency reserves
- Debt reduction
- KiwiSaver optimisation
- Diversified investments
- Income planning
- Insurance protection
Estate planning
Obviously from a planning perspective the best time to start is now and there are some simple things that you can do:
- Get clarity of your vision. (We have tools to help you with this)
- Once you determine your vision (your destination) and your current position it is a lot easier to map out your journey.
- Seeking trusted financial advice
- Get a plan. (A roadmap, you determine your future)
- Cashflow analysis (How much money will you actually need in retirement)
- Reserves. Build a sleep at night fund.
- Reducing debt
- Review your KiwiSaver. Asset allocation and fees.
- Review your investment structure.
- Increasing contributions where possible.
- Risk management. Insurance protection and estate planning
Avoid the common mistakes Kiwis make:
- No Plan
Get advice, you need to know you have done enough to have a sustainable income for 30 years in retirement. It is too late to think about it 5 years out from your retirement.
- Starting KiwiSaver too late.
You must understand that it is not the 5 years you are missing out on at the beginning. You are taking 5 years of compounding growth at the end. (See example below)
- Staying in the wrong fund type.
Your asset allocation is critical to the success of your plan. (See explanation below)
- Carrying mortgage debt into retirement.
You cashflow in retirement is critical and you don’t want to be servicing large debt in retirement.
- Relying solely on NZ Super
This will not give you any type of lifestyle. It will barely keep your head above water.
- Ignoring inflation
The biggest risk is not markets going up and down, that is what they do. The biggest risk is you losing your purchasing power. A plastic punnet of butter is $10 today. What did you pay for that 5 years ago and what will you pay for it in 10 years' time?
- Failing to review retirement goals regularly
Life changes, keep up with it. Seek advice and have regular catch ups.
- Not diversifying investments
Diversification is crucial to your plan, spread your investments to lower your overall volatility.
The biggest mistake is assuming retirement will “just work itself out.”
I will finish with this final comment and an example of why starting early makes such a difference.
The two key things that will make over 90% difference to your investment outcomes are your asset allocation and diversification.
Asset allocation is important because it is one of the biggest factors that determines your investment risk, return, and long-term financial stability. It means spreading your money across different types of investments such as shares, bonds, cash, and property instead of putting everything into one area. Research consistently shows that asset allocation is one of the biggest drivers of long-term investment returns and volatility.
Good allocation helps:
- Reduce emotional investing
- Manage market downturns
- Improve long-term consistency
- Protect retirement savings
Diversification is important because it helps reduce investment risk without necessarily reducing long-term returns. The principle is often summed up as:
“Don’t put all your eggs in one basket.”
When investments are spread across different assets, sectors, countries, and industries, poor performance in one area can be offset by stronger performance elsewhere.
Starting Early Example
Sarah starts at age 25
- Saves: $100 per week
- Average return: 7% annually
Retires at 65
Approximate result:
- Total contributions: about $208,000
- Retirement balance: about $1,050,000
Mike starts at age 35
- Saves: $100 per week
- Average return: 7% annually
- Retires at 65
Approximate result:
- Total contributions: about $156,000
- Retirement balance: about $490,000–$520,000
Even though Mike contributed a large amount, Sarah’s extra 10 years of compounding nearly doubled the final balance.
This is the “snowball effect” of compound returns. (Sorted NZ) - Steve Baker
Retirement planning is not something you have to navigate alone. If you would like support creating a plan that works for your future, contact FoxPlan today.
0800 NO STRESS
info@foxplan.nz
www.foxplan.nz