The world can change overnight. We saw proof of that very recently; over the span of one week, the Queen passed away after seven decades in service, and the covid traffic light system was dismantled. Big change over a short time – one internationally, and one in a more local context.
If you live for the headlines, the future can seem like a scary place with too many questions and not enough answers. We see this in investing, as in life; it pays not to get caught up too much in the ups and downs, no matter how influential they may seem at the time.
We saw this with covid, and before that the 2008 financial crisis, and before that the dotcom bubble burst of the early 2000s, and before that... well, I could just keep going. Big things happen. Change occurs, however permanent or otherwise.
The Queen’s death, while emotionally significant to many, will have no long-term impact on the markets.[i] Nor will New Zealand’s next step in opening ourselves to the world again, as impactful as it might feel to some here at home.
These events do serve, however, as a timely reminder to make sure you have a robust plan in place.
No matter your stance on the monarchy, you have to admit their continuity plans are usually extensive and well-executed.
Your plan for retirement and beyond likely doesn’t have as many considerations as the succession of a monarch, but you should have a plan regardless to make sure you meet your goals and allow yourself a comfortable future.
Some excuses we’ve heard as advisers:
1.) I’ll save when I’m older.
You don’t have to be nearing retirement age to start enacting a retirement plan – in fact, it’s better if you start as early as possibly to account for life’s ups and downs (and market volatility, which is generally cushioned by time). Remember, a dollar today is not equal to a dollar tomorrow – so you need to account for that when you’re planning how much you need.
Why would you not give yourself as much time as possible to keep your future self ahead? And while you’re at it, consider contributing to a well-rounded, diversified portfolio as a way of making your money work harder than it would in your bank account.
2.) I can’t afford to save.
It’s definitely harder for a lot of people to find space to save when their belts are fully tightened against the current cost of living crisis. If you can find a little extra though, start putting it away – a little over a long time is still better than nothing at all.
There’s things you can take advantage of here, like the Government contribution to your chosen KiwiSaver fund. You only need to put in $1042.86 annually for the government to contribute up to $521.43. This can then be invested by your provider according to your risk tolerance – i.e., whether you are in a conservative, balanced or growth KiwiSaver fund.
3.) I’ll just rely on NZ Super when I retire.
The NZ Super currently does not match the amount required to live in New Zealand – regardless of if you live in a city, in a rural area, or if you are single or in a couple. The Massey University New Zealand Retirement Expenditure Report for 2022 shows that, just as in the 2021 report[ii], even a no-frills provincial lifestyle exceeds the amount you would receive with the NZ Super.[iii]
4.) I don’t know where to start or who to trust.
If you’re seeking a second opinion on your current retirement planning or want some advice on where to start, sitting down with a trusted fiduciary to discuss your unique situation is a good first step. Look for fees-only, independent financial advisers who have your best interests in mind.
Getting rid of your excuses now can help you avoid money stress down the line. If you can figure out what your reason for procrastinating is and fix it, you can then get to work on your nest egg – which your future self will definitely thank you for.[iv]
And while you’re thinking about it, when was the last time you updated your Will and EPA documents? Even without an actual crown to hand down, it’s still important to know how you will build your empire and who will inherit it should the worst happen.
Everybody wants to retire as comfortably as possible. Even if it seems a long way off, it pays (pun intended) to start planning for retirement as early as possible.
Nick Stewart is a Financial Adviser and CEO at Stewart Group, a Hawkes Bay and Wellington-based CEFEX certified financial planning and advisory firm.
The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz
[i] https://www.nasdaq.com/articles/what-queen-elizabeths-death-means-for-the-markets
[ii] https://www.stewartgroup.co.nz/we-love-to-write/2021/11/19/getting-super-motivated
[iii] https://www.massey.ac.nz/documents/476/nz_retirement_expenditure_gudelines.pdf
[iv] https://financebuzz.com/worst-retirement-excuses
