Saving For Retirement With enableMe

We all know that Kiwisaver is a retirement savings scheme, but what happens to your account when you turn 65? You will be eligible to take out all the money that is in your Kiwisaver account. That’s all your contributions, your employer’s contributions, the government kick start and member tax credits, plus or minus any returns on your investments.  

What’s more, any withdrawals you make from KiwiSaver won’t be taxed - because you have already paid tax on your investment returns. However, you don’t have to take your money out - you can leave some or all of it in your Kiwisaver account.

If you had $20,000 in your Kiwisaver account and you became eligible to withdraw it, you could take it all out and buy a new car or fix your roof. But if you left it there, your account could keep making money for you.

If you left that $20,000 in your Kiwisaver account and it earned a real rate of return of 2% a year, you could withdraw $40 a fortnight for around 19 years.

And of course if you continue to add to your Kiwisaver account with voluntary contributions, it can keep on growing through your retirement years.

If you're not on track to have what you’ll need in retirement, your options are to earn more, spend less, reduce your one-off costs, invest to get a higher return, or use leverage to buy a capital gain asset.

However, as enableMe’s Hannah McQueen says, “In many cases, we're spending far more than we earn while we're earning, so have little hope of making ends meet when we're not. Working out what you'll need and whether you're on track to have it is the absolute foundation of making sure your retirement savings will last the distance.”

McQueen says most retirees' savings are exhausted within 10 years, as most have saved considerably less than they estimate they'll need. “If you can't save more for your retirement, then you'll need to spend less in your retirement, a prospect that's banishes all notions of spending your golden years spoiling your grandkids and replaces it with a life of beans and rice. That should be motivation enough to start doing your sums”.

enableMe will start with an no-obligation consultation to assess your current level of ‘financial fitness’ and talk to you about how they could help you achieve your goals faster, so for more information on financial advisors, budget advisors and financial planning please go to http://enableme.co.nz .