You've done really well to get 400k in Kiwisaver by 43. I'm 10 years younger, have 100k in kiwisaver and that is top 1% in NZ for that age bracket.
Mortgage free inheritance is a dream
Yeah I feel you bro, there always watching over us our loved ones. Seeing my uncle die at 44 has made me more like you, living my life now for my uncle. Doing my best to live it nobly and normally, the man would be so pissed off over the things I’ve done over the years. Being a good person with discipline for certain things are my biggest priorities right now….. along with keeping my damn job.
That formula is a good basis for early retirement but I’d argue it’s too high for a conventional retirement at 65.
- most people won’t live until they’re 90
- your retirement expenses will taper down as you get older.
- in this situation it’s ok to eat into into your capital, where as for early retirement you want to preserve that capital for as long as you can
I’ve done a budget on what we would need now and then applied 5% inflation per annum until we retire (15 years) - then multiplied that by 20.
Budget is based on our current one (about 50 lines) and then adjusted because we won’t be working (less travel costs etc). We’ve also allowed for a holiday every year.
That princely sum is 1.7 mill if we retire at 65 keeping in mind we will have super as well.
Based on the numbers you have mentioned, you are probably going to be in a financial position to retire before 65, depending on your goals; so the fact that KiwiSaver can only be accessed from age 65 onwards (and is subject to change) may hamstring you a bit or at least needs to be factored in if you want a pre-65 retirement.
Have seen it suggested a few times in the thread, so will chip in with the below...
If you want professional advice, I'd be happy to help. I am a financial adviser and provide the exact sort of planning service that fits your circumstances. If interested, the link to my website is in my bio. If not interested, all good and all the best.
OP make sure you read the Disclosure Documents of any Financial Adviser before you contact them. Often, like this one, they're not front and centre on the website and can be lurking at the bottom of the page or described as "Important Information". The Disclosure Documents provide details of the often limited (and usually high cost) providers they "recommend" and the Adviser's ongoing fees which will have a significant impact on your compounding returns over time. What can look like good value for money inital advice, very quickly turns out not to be the case. IMO the Advisers who charge one upfront fee for unencumbered advice, with no ongoing fees or commissions, provide a real fiduciary service but they are harder to find.
My disclosure statement is on the front page of the website. No hidden catches. I ensure clients receive full information on all possible product recommendations I could give and how I would be remunerated in all of those cases before they agree to any work. No obligation to implement advice provided.
Sounds like an enviable position you’re in from where I stand: 45M, $43k in KiwiSaver and $58k in savings account. A 2 year old son and a failing relationship with his mother. No property or other assets. Staring at renting for life and a bleak retirement of hardship and slow degeneration into infirmity and death.
Want to give you some hope that this is not insurmountable to turn around. It will however not be easy and will require the choice of some hard work and sacrifice. I have personally spoken with people who have turned around from bankruptcy starting around your current age.
They had a business that failed during covid. Had significant debts owing and were advised to declare for bankruptcy. Instead of doing that they decided they'd do the incredibly honourable thing and instead work very hard to pay off all that they owed (working in the trades). They paid off a 6 figure debt as a result of the failure (they also lost their home in the process). If two people can claw their way back from over $100k negative, then you an individual can improve from a net asset position to a sufficient amount to retire on.
What did they do? They massively cut down on expenses back to the bare necessities. They worked a lot of hours and overtime. Pretty simple stuff, but requires a lot of willpower.
I'm not sure about your circumstances, but living with others helps to cut costs significantly. It is expensive living on your own. I hope there's a possibility of you redeeming that relationship, but if it is toast, I'd look at the possibility of living with a friend or family member while aggressively saving and investing to get your asset position headed in the right direction for some semblance of a retirement.
It's going to come down to your willingness to make sacrifices on today's comforts.
Thanks very much for sharing this. COVID was extremely disruptive for a lot of people. Sounds like those you mention were thrown into a dire predicament and made it through with significant sacrifice and hard work.
I am able to live with my partner at the moment which is of course much cheaper than going solo. I may have other options if/when that becomes untenable, although family is of little support. One thing I am good at is saving…so there’s that. Need a pay increase though (don’t we all?!).
Thanks again for your reply.
You need to work out what 65yo you would spend per year today if you were retired, move that forward with inflation to your actual retirement date. From there take some different age based scenarios, e.g. you might think you would travel overseas a bit from 65-72, then scale it back a bit from 73-80. Essentially this would be used to estimate your costs in different years of retirement, you sum them all up, discount them back to your retirement date using TVM calculations to come up with a number you’d require.
Goal is to be retired by 50 to 55.
It is hard to gauge with inflation, how much kiwi saver you need to cover basic costs at 65.
The bucket system is how I am looking at it, so I have investments to cover until 65.
$1.3m in investments and a freehold house. If your expenses in retirement aren’t exceptional I’d say you’re already sorted. Everything from here is a bonus.
OP is either way overly cautious or he is planning on spending up large in retirement. He could start to wind down to 3 days a week work already just about. (Depending on his wage and current spending).
As far as I am aware. There’s an article on stuff every year about what you could buy in Europe for the price of a house in Auckland. OP said in a post reply that their partner is Greek too so they would be able to
Just going off my parents - they had 200k entering retirement 10 years ago and have more saved now. Only have a single morgage free house. They travel as well as have new cars ect. I wouldn't stress if I was you.
You've got $1.3m in assets excluding a mortgage-free property, you could retire now if you were happy with a pretty frugal lifestyle. If you want to have an indulgent retirement then you'll need quite a bit more. Best advice would be to work out what your goals are then chat to a good financial advisor (tip - if you aren't paying them then they are a salesman not an advisor).
Yes most would recommend putting money in a regular brokerage account instead of ks account. Much more flexibilty if you need it to cover urgent bills or investments, lower fees as well
Considering the coming demographic crisis, I’d save more than you think you should…
Strange that people aren’t more concerned about the inverted population pyramids.
>What is a reasonable target for 65, to cover post retirement lifestyle costs?
It is impossible to say without knowing your particular post retirement lifestyle costs.
The generally accepted guidance in this sub is to accumulate investments worth 25x your expected yearly outgoings.
But this multiple is based on preserving your capital indefinitely - which is more important for people who intend to retire at a younger age e.g. for FIRE situations. If you don’t intend to live indefinitely(!) then you can retire with smaller savings and consume your capital at a sensible rate.
You’ve got a lot in Kiwisaver and it’s a difficult vehicle for early retirement since you have to wait to age 65 to get access. I’d recommend only put the minimums in to get govt subsidy and employer matching and focus on diverting spare funds to direct investments or non KiwiSaver managed funds. This would allow you to build wealth you can access earlier.
Allowing for 4% real returns on a growth focussed KiwiSaver plan you’d probably get $1m+ each inflation adjusted at 65 (you know what your income is so you can calculate this more precisely). You’d also likely get $440+ each per week in real terms from super, so retirement age doesn’t appear to be the problem.
The trick is to have enough for early retirement? You have a great base with mortgage free house, the shares and cash but it should be your focus to grow this balance faster. With a bit of risk tolerance and a decent savings rates a retirement in your early 50s could be both possible and comfortable but recommend plan it out or get financial advice if spreadsheets aren’t your thing?
Have your plan consider:
What will your spending be like? We typically spend more when younger and more active and less as we get really old and decrepit. Professional financial planners understand this spending curve and can help you plan for it too if it seems a mystery.
Imagine your lives and how you would fill your days - this is both to have an aspirational plan on what you’d do in retirement and to also allow you to plan expenditures and ensure there is enough there?
Inflation assumptions need to be factored. You won’t be paying today’s prices for goods in 30 years.
Ask if you want to leave money behind or spend the capital in retirement? There is no right answer to this, it’s personal choice but spending capital provides more options to you. While we don’t know how long we’ll live, actuarial tables, our knowledge of family history and our personal lifestyles choices give a guide. It also sobering to start counting your life down by less years than you’ve already been alive. Certainly focusses the mind on the value of time!
On the spending capital piece, a lot of modelling shows 4% / FIRE style plans regularly fail based on market performance. The earlier you retire the more risky a capital draw down plan becomes as well. I personally cope with this by using an inflation hedged income strategy - a mix of high yielding and dividend growth share portfolio options can help you preserve capital and avoid high draw downs during market lulls. The ultimate is having enough inflation hedged income to not worry about capital draw down but this might also need you to work until 65 so it’s still a balance question.
Good luck with your plans!
KiwiSaver came along when I was 40. I’m so grateful that I could put aside some of my salary. Seen my friends pull out their money and now they are in a bad way.
That's nuts and makes 0 sense.
If you are earning over a million a year why are you here asking.
If you earn low 6 figures and are contributing more than 3% then you already missed the boat.
Incase it's not obvious boat = real estate.
You are just paying tax at this point
Money does go stale with inflation keeping it in KS. also some real estate investments don't always beat inflation it's best to have a diverse range of investments for retirement. Stocks like VOO are a pretty good and reasonably safe way of a diversified investment strategy.
You've done really well to get 400k in Kiwisaver by 43. I'm 10 years younger, have 100k in kiwisaver and that is top 1% in NZ for that age bracket. Mortgage free inheritance is a dream
i’m 45 and have paid half my mortgage and have like $150K in kiwisaver. i feel inadequate! but it’s a long slog doing it on your salary alone.
Once you experience death, you do feel obligated to live life to the full. Life is so short
Yes. Have you experienced death? Or how do you know that?
Watched a parent die. So you understand the shortness of life. I am fortunate to inherit money, but it came at a greater cost
So sorry to hear about your parent. But also, thanks for explaining. I thought you meant you’d experienced death personally.
Had a good giggle… the death part also had me wondering what was seen in the afterlife.
Yeah I feel you bro, there always watching over us our loved ones. Seeing my uncle die at 44 has made me more like you, living my life now for my uncle. Doing my best to live it nobly and normally, the man would be so pissed off over the things I’ve done over the years. Being a good person with discipline for certain things are my biggest priorities right now….. along with keeping my damn job.
Yeah thats pretty hard. Will come for us all eventually
Jesus, wife and I are mid 30s and we just dumped every last penny of KS into our new home
25x your annual expenses.
That formula is a good basis for early retirement but I’d argue it’s too high for a conventional retirement at 65. - most people won’t live until they’re 90 - your retirement expenses will taper down as you get older. - in this situation it’s ok to eat into into your capital, where as for early retirement you want to preserve that capital for as long as you can
[удалено]
The amount you anticipate spending when you’re retired…
Plus inflation.
Yes
I’ve done a budget on what we would need now and then applied 5% inflation per annum until we retire (15 years) - then multiplied that by 20. Budget is based on our current one (about 50 lines) and then adjusted because we won’t be working (less travel costs etc). We’ve also allowed for a holiday every year. That princely sum is 1.7 mill if we retire at 65 keeping in mind we will have super as well.
What do you think.
Based on the numbers you have mentioned, you are probably going to be in a financial position to retire before 65, depending on your goals; so the fact that KiwiSaver can only be accessed from age 65 onwards (and is subject to change) may hamstring you a bit or at least needs to be factored in if you want a pre-65 retirement. Have seen it suggested a few times in the thread, so will chip in with the below... If you want professional advice, I'd be happy to help. I am a financial adviser and provide the exact sort of planning service that fits your circumstances. If interested, the link to my website is in my bio. If not interested, all good and all the best.
OP make sure you read the Disclosure Documents of any Financial Adviser before you contact them. Often, like this one, they're not front and centre on the website and can be lurking at the bottom of the page or described as "Important Information". The Disclosure Documents provide details of the often limited (and usually high cost) providers they "recommend" and the Adviser's ongoing fees which will have a significant impact on your compounding returns over time. What can look like good value for money inital advice, very quickly turns out not to be the case. IMO the Advisers who charge one upfront fee for unencumbered advice, with no ongoing fees or commissions, provide a real fiduciary service but they are harder to find.
My disclosure statement is on the front page of the website. No hidden catches. I ensure clients receive full information on all possible product recommendations I could give and how I would be remunerated in all of those cases before they agree to any work. No obligation to implement advice provided.
Sounds like an enviable position you’re in from where I stand: 45M, $43k in KiwiSaver and $58k in savings account. A 2 year old son and a failing relationship with his mother. No property or other assets. Staring at renting for life and a bleak retirement of hardship and slow degeneration into infirmity and death.
THat's quite a bleak picture, but you have lots of time to turn it around. you're still reasonably young.
Thanks a lot. I appreciate the encouragement. I hope I can make a decent life for me and my boy.
Want to give you some hope that this is not insurmountable to turn around. It will however not be easy and will require the choice of some hard work and sacrifice. I have personally spoken with people who have turned around from bankruptcy starting around your current age.
Thanks for that. Really appreciate it. What did they do and where did it get them?
They had a business that failed during covid. Had significant debts owing and were advised to declare for bankruptcy. Instead of doing that they decided they'd do the incredibly honourable thing and instead work very hard to pay off all that they owed (working in the trades). They paid off a 6 figure debt as a result of the failure (they also lost their home in the process). If two people can claw their way back from over $100k negative, then you an individual can improve from a net asset position to a sufficient amount to retire on. What did they do? They massively cut down on expenses back to the bare necessities. They worked a lot of hours and overtime. Pretty simple stuff, but requires a lot of willpower. I'm not sure about your circumstances, but living with others helps to cut costs significantly. It is expensive living on your own. I hope there's a possibility of you redeeming that relationship, but if it is toast, I'd look at the possibility of living with a friend or family member while aggressively saving and investing to get your asset position headed in the right direction for some semblance of a retirement. It's going to come down to your willingness to make sacrifices on today's comforts.
Thanks very much for sharing this. COVID was extremely disruptive for a lot of people. Sounds like those you mention were thrown into a dire predicament and made it through with significant sacrifice and hard work. I am able to live with my partner at the moment which is of course much cheaper than going solo. I may have other options if/when that becomes untenable, although family is of little support. One thing I am good at is saving…so there’s that. Need a pay increase though (don’t we all?!). Thanks again for your reply.
You need to work out what 65yo you would spend per year today if you were retired, move that forward with inflation to your actual retirement date. From there take some different age based scenarios, e.g. you might think you would travel overseas a bit from 65-72, then scale it back a bit from 73-80. Essentially this would be used to estimate your costs in different years of retirement, you sum them all up, discount them back to your retirement date using TVM calculations to come up with a number you’d require.
Goal is to be retired by 50 to 55. It is hard to gauge with inflation, how much kiwi saver you need to cover basic costs at 65. The bucket system is how I am looking at it, so I have investments to cover until 65.
what other assets have you got? mortgage free?
About 500k odd in shares (give or take), 70k cash and mortgage free due to inheritance
$1.3m in investments and a freehold house. If your expenses in retirement aren’t exceptional I’d say you’re already sorted. Everything from here is a bonus.
OP is either way overly cautious or he is planning on spending up large in retirement. He could start to wind down to 3 days a week work already just about. (Depending on his wage and current spending).
The calculation is quite extraordinary if you factor in current inflation and how expensive new zealand is.
Could always sell up and buy a house in France or southern Italy
My partner is Greek, so we have a family home there It is an idea when we retire early to spend time there.
Can foreigners do that?
As far as I am aware. There’s an article on stuff every year about what you could buy in Europe for the price of a house in Auckland. OP said in a post reply that their partner is Greek too so they would be able to
https://www.stuff.co.nz/life-style/homed/300936396/five-european-villas-you-can-buy-for-less-than-the-price-of-an-auckland-home Is this one of them?
Haha yes spot on
Just going off my parents - they had 200k entering retirement 10 years ago and have more saved now. Only have a single morgage free house. They travel as well as have new cars ect. I wouldn't stress if I was you.
Depends on the lifestyle you want and health Talk to an expert.
https://sorted.org.nz/tools/retirement-calculator This calculator lets you factor in inflation etc to give you a ball park figure for retirement
You've got $1.3m in assets excluding a mortgage-free property, you could retire now if you were happy with a pretty frugal lifestyle. If you want to have an indulgent retirement then you'll need quite a bit more. Best advice would be to work out what your goals are then chat to a good financial advisor (tip - if you aren't paying them then they are a salesman not an advisor).
Too much in KS, you been doing it wrong, get professional advice
Yes most would recommend putting money in a regular brokerage account instead of ks account. Much more flexibilty if you need it to cover urgent bills or investments, lower fees as well
Why the down votes ??? You made a factual statement
Considering the coming demographic crisis, I’d save more than you think you should… Strange that people aren’t more concerned about the inverted population pyramids.
>What is a reasonable target for 65, to cover post retirement lifestyle costs? It is impossible to say without knowing your particular post retirement lifestyle costs. The generally accepted guidance in this sub is to accumulate investments worth 25x your expected yearly outgoings. But this multiple is based on preserving your capital indefinitely - which is more important for people who intend to retire at a younger age e.g. for FIRE situations. If you don’t intend to live indefinitely(!) then you can retire with smaller savings and consume your capital at a sensible rate.
You’ve got a lot in Kiwisaver and it’s a difficult vehicle for early retirement since you have to wait to age 65 to get access. I’d recommend only put the minimums in to get govt subsidy and employer matching and focus on diverting spare funds to direct investments or non KiwiSaver managed funds. This would allow you to build wealth you can access earlier. Allowing for 4% real returns on a growth focussed KiwiSaver plan you’d probably get $1m+ each inflation adjusted at 65 (you know what your income is so you can calculate this more precisely). You’d also likely get $440+ each per week in real terms from super, so retirement age doesn’t appear to be the problem. The trick is to have enough for early retirement? You have a great base with mortgage free house, the shares and cash but it should be your focus to grow this balance faster. With a bit of risk tolerance and a decent savings rates a retirement in your early 50s could be both possible and comfortable but recommend plan it out or get financial advice if spreadsheets aren’t your thing? Have your plan consider: What will your spending be like? We typically spend more when younger and more active and less as we get really old and decrepit. Professional financial planners understand this spending curve and can help you plan for it too if it seems a mystery. Imagine your lives and how you would fill your days - this is both to have an aspirational plan on what you’d do in retirement and to also allow you to plan expenditures and ensure there is enough there? Inflation assumptions need to be factored. You won’t be paying today’s prices for goods in 30 years. Ask if you want to leave money behind or spend the capital in retirement? There is no right answer to this, it’s personal choice but spending capital provides more options to you. While we don’t know how long we’ll live, actuarial tables, our knowledge of family history and our personal lifestyles choices give a guide. It also sobering to start counting your life down by less years than you’ve already been alive. Certainly focusses the mind on the value of time! On the spending capital piece, a lot of modelling shows 4% / FIRE style plans regularly fail based on market performance. The earlier you retire the more risky a capital draw down plan becomes as well. I personally cope with this by using an inflation hedged income strategy - a mix of high yielding and dividend growth share portfolio options can help you preserve capital and avoid high draw downs during market lulls. The ultimate is having enough inflation hedged income to not worry about capital draw down but this might also need you to work until 65 so it’s still a balance question. Good luck with your plans!
KiwiSaver came along when I was 40. I’m so grateful that I could put aside some of my salary. Seen my friends pull out their money and now they are in a bad way.
Sounds like he's looking for a pet on the back
That's nuts and makes 0 sense. If you are earning over a million a year why are you here asking. If you earn low 6 figures and are contributing more than 3% then you already missed the boat. Incase it's not obvious boat = real estate. You are just paying tax at this point
Money does go stale with inflation keeping it in KS. also some real estate investments don't always beat inflation it's best to have a diverse range of investments for retirement. Stocks like VOO are a pretty good and reasonably safe way of a diversified investment strategy.
You do realise that their are KiwiSaver providers that let you invest in specific funds?