Your retirement years are around a third of your adult life and it’s worth planning ahead to make sure they are the best years of your life. Approaching retirement age is a bit like running up to the finishing line after a marathon race. A big spurt of effort is needed just at a time when you feel like giving up and taking it easy.

If you are five years or less away from retirement, your ability to change your financial future is much less than if you are ten or twenty years away. The best strategy in the last five years is to simply save as much as you can. You will then add to your retirement capital while also adjusting to living on much less. With ten or twenty years to go, there is plenty of time to adjust your savings and investments so as to make a big difference to your retirement outcome. It is never too soon to start planning for retirement.

NZ Superannuation is enough (barely) to cover your daily living expenses so long as you have a debt free home. For every $10,000 of annual income you want in addition to your pension, you will need around $180,000 invested. Think carefully about how much money is tied up in your house and how much you have available to fund your retirement. If most of your wealth is in your house you are in danger of being ‘asset rich and cash poor’ as they say. You can fix this by trading down to a cheaper house or possibly taking out a reverse mortgage.

Unless you have substantial wealth, you will need to run down your retirement capital over your lifetime to have a comfortable life. However, there is nothing wrong with spending your kids’ inheritance!