Retirement Planning HINTS FOR A BETTER RETIREMENT
Useful Retirement planning tips, ideas and suggestions to help you enjoy a long and prosperous retirement.
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- Can my Younger partner receive NZ Super when I turn 65?
- How safe is NZ Super?
- Did NZ Super actually go up this year
DID NZ Super actually go up this year?
On the 1st of April each year, the New Zealand Superannuation (NZ Super) rates receive their annual increase.
The changes typically amount to a ‘pay rise’ of approximately 3.7% (last 10 yrs average increase). A couple receiving Super will gain approximately $29 a week.
Super is insufficient to provide a quality lifestyle in retirement, and recent articles suggest things are only going to get harder:
- Fuel could easily break back through $3 a litre as a result of global tensions
- Councils continue to increase their rates to fund unnecessary projects,
- Power prices continue to rise,
- Kiwis spent on average an extra $4000 to $5000 in the past 12 months on basics like food, rent and petrol, and it is expected this amount will increase due to the Ukraine crisis and supply chain issues,
- Rents for new tenancies nationwide rose by 5.8 per cent in the year to December according to Stats NZ. And with rates increases typically passed onto tenants these will continue to rise,
- The cost of GP visits and medications continue to rise.
With inflation for the year already running at 3%, and with some economists predicting it will not fall within the range 1% - 3% for the year to April, recent increases in NZ Super, ON PAPER, nz Super is only just keeping ahead of inflation. But is it really?
The ‘basket of items’ used in the calculation of inflation includes many items that do not impact retirees (e.g. Public Transport as the Gold Card provides free off peak travel). This suggests the annual inflation rate experienced by retirees (i.e. to include just the price increases of the goods and services they typically use) is even higher. For example, the annual food prices February 2022 compared with February 2021 (Stats NZ) were:
In summary – NZ Super increased by $40 per week ($80 per fortnight) for a couple, however:
- the average grocery shopping bill increased by $34 per week for a couple
- 50 Litres of petrol per week went from $1.92/L to $2.95/L per week, a $51 per week increase
- Nationally rents increased on average $100 per week. If you are lucky enough to not have to rent, your rates went up on average $7 per week, the average cost of house insurance increased by $10 per week, and hopefully you won’t have to do any maintenance (building materials increased by over 10% and labour 8%).
- power has already increased by an additional $20 per week (due to the high cost of burning imported coal).
Basic living costs increased on average $120 (per week for a couple) over the last 12 months. A recent Westpac survey found that “a third of households are not coping with the cost of living crisis”
You need to have a financial plan where you can model the impact any lifestyle cost changes will have on your retirement. If you do not yet have one, you can download our free planning guide and spreadsheet. You can then work through the options available to you to minimise the impacts these cost increases cause, and get your retirement back on track.
Obvious areas to look at include:
- Prioritisation on expenses – focusing on your ‘needs’ rather than your ‘wants’ can free up cash for other more important things.
- Sorting out your debts – repaying or restructuring your debts can make a significant impact on the overall amount you repay, and can improve your weekly cashflow
- Maximising Returns – ensure you are getting the best returns for your investments by checking all your investments are performing “at the top of their class”. Fixing those that are not performing will improve the money you have in retirement through the power of compounding interest.
- Checking you are getting the best deals – there are multiple comparison sites available to check your power, internet, insurance, cell phone provider and plans. You should use these regularly to check you are getting the best deal. If you are already retired don’t forget the discounts you can get from using your Gold Card.
- Changing your lifestyle - small temporary changes can make a big impact on your regular outgoings. Do you need to use the car so often? Could changing your driving style reduce your petrol consumption? Should you change supermarket, or eat out less? Can you take in a border short term or rent out the garage?
Our free retirement planning guide provides a simple independent step by step guide to help you address and check these areas. It also provides suggested websites that can assist you.
We do not sell any products, nor are we affiliated with any bank, insurance company or fund manager. We provide this information free to help educate people like you to become financially ready for retirement.