Whatever your circumstances and situation, having a clear idea of your goals and knowing how you plan to get there can help you maximise your financial life.
Here are a few things to think about when it comes to financial planning for your New Zealand retirement.
Why does it matter?
In general, people are living longer, and this often means that they need their financial resources to keep up, too.
As you plan your retirement, you’ll need to think about how you will cover the likely costs you might face over the years. That might be expenses related to housing and other essentials, or to the added extras you might like to enjoy.
You’ll need to take into consideration money you’ll spend on things like healthcare and insurance as well as your daily living costs.
What it might cost to live as a retired person in New Zealand can vary a lot according to your individual circumstances and lifestyle aspirations. Massey University produces a guideline based on current retirees’ spending, which could help.
Consider your retirement income sources
It’s increasingly common to need income from a range of sources in retirement.
Depending on how long you’ve lived in New Zealand, you may qualify for NZ Super. You might have a pension from the UK that you can draw down, or might choose to transfer to New Zealand and manage from here. If you’re moving to New Zealand with a plan to work here for a while, you may also have KiwiSaver by the time you retire that could provide another investment stream to access once you are 65. In addition, you may have your own investments and savings to draw upon.
These investments and income sources should work together to provide you with the financial support for your retirement. Having a plan for how they will supplement each other may be very helpful.
You might plan to leave your KiwiSaver in a higher-growth investment for longer, for example, to give you more capital later in life, or you could choose to draw some of your investments down early to fund things like travel, before you rely on other income sources later on.
We can help you put together a plan to guide you on what you might be able to expect from your investments, and how you could use them to fund the retirement you’re hoping for.
Tax considerations
There may be tax considerations that form part of your financial plan, depending on your individual situation.
If you’re moving permanently to New Zealand, you currently have a four-year transition window before tax obligations apply to any UK pension transfer you choose to make.
If you have overseas investments after that point, they may be captured by the foreign investment fund (FIF) regime. You may need to seek advice on this.
In general, New Zealand managed funds and KiwiSaver funds are PIE investments, which caps the top rate of tax that can apply. Your income, including your NZ Super and other regular income schemes, will be taxed at the applicable marginal tax rate.
Planning your investments
Your investment plan will need to take into account things like the diversification of your investments. Spreading your investments both geographically and across sectors and asset classes can help to reduce your risk.
As advisers, we can help you put together a diversified portfolio that matches your needs and individual circumstances. The amount of risk you take with any of your investments will need to match your risk profile and goals.
Don’t set and forget
All investment plans, including for retirement, should be reviewed regularly.
The right solution now may not always be an appropriate fit, and it’s important to adjust your settings as you go along, to ensure that your plan stays relevant.
Having an adviser can make a big difference when it comes to making decisions and staying the course.
If you’d like to discuss your options, or to talk about setting up a plan for your future, get in touch with us. Our expert team would be happy to help.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.