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In the financial planning world, a common question is: What's Your Number? And no, this isn't your cell phone or your bank account! This is the number, or the amount of money you need to earn, to stop working to live.
We talk about it a lot at work. It's an incredibly important number for everybody. Why?
Because we could spend, up to thirty years of our lives not earning.
Many people will need enough money for thirty sustainable lifestyle income years for retirement. If you are a female, you have a 14% chance of living thirty years past 65. If you are male, this is 8%.
And that may be even more, if we are forced into early retirement for medical or redundancy reasons.
I think it's fair to say that a lot of Kiwis don't know their "number" and may have a low-level anxiety burning in the background about how they are going to fund their retirement. I also think that some of us tend to put the question in the Too-Hard-Basket, or the I'll-Do-It-Next-Week-Basket. I can put my hand up as a person who could formerly relate.
The problem is that for every day we put it off, it might mean another day having to work at the other end, when we'd rather be travelling the world or painting or doing any other awesome thing we can dream up.
I've got some lovely ideas for this time in my life. After my extended Eat Pray Love post-kids travels, I fancy a country cottage with a library/writer's room, a collection of my cameras and prints, and a plethora of rescue pets. It won't be anything particularly fancy, more than anything I just want the freedom to not work and enjoy life while my health (fingers crossed) is good.
According to stats from Massey University, I'll need $1263 a week to support that lifestyle (extra for the dogs).
A few years ago, I worked out my (then) KiwiSaver trajectory and factored in the NZ Super. I realised I would be falling short for my retirement dream. That was grim. The years raising three kids and working part-time did not work in my favour here! (Top tip: Voluntary KiwiSaver contributions!)
With the wisdom of my colleagues and a shift in my money habits, I'm most pleased to say that I've managed to turn things around so that Dog Cottage may not be such a nutty dream after all.
This month, which is Money Month, a lot of focus is on growing our money and fostering financial wellbeing. Part of this theme is forward planning for our retirement, the age where we stop working to live, and of course, working out our numbers to hit our goals. I am a GenX cusp Millennial and in theory I am about to hit my peak earning years. I am really proud of myself that I have pulled my head out of the sand (where it was comfortably buried) and started thinking and planning my financial future.
There are some great tools on the Retirement Commission's website, Sorted, that can get you started and help you identify where some of those gaps are. These helped give me an overview of what my position was today, what it needed to be in the future, and the gap I had to close. I recommend having a tinkle on those tools.
It doesn't matter what you do, just do something.
As part of my "financial wellness" journey, I'm also doing some financial planning with Elizabeth, my Velocity Adviser. Aside from the "What's Your Number" part, there are other things that need sorting as well, and this is where a plan is absolutely worth my time, effort, and expense.
It's also one more grown-up step beyond the free Sorted tools, and one massive relief to get some of these "What ifs" sorted.
These are some of the questions I wanted to know, and the financial planning process helped me with that:
So, if you're like me and not quite sure about your number, or if you have a dream but aren't certain how to get there, why not start by doing a bit of research on the Sorted website during Money Month? It’s a great way to get some ballpark figures. And if you're looking for more confidence and assurance, and maybe have some questions of your own like the above, then consider the tailored financial planning route. Have a chat with our planners, Elizabeth or Dean, about what that entails. This way, you can move forward with real confidence and take steps towards a future that is truly awesome.
Shona.
About Shona: Hi, I’m Shona, the communications and marketing person for Velocity Financial. Designing effective communications in a complex industry such as Finance is a worthy challenge. Finding ways to bridge gaps between complex financial information, and the everyday needs of people trying to navigate that world through informed choices, is something that I relish. I love deciphering and disseminating the expert knowledge and ideas of our clever team, into simple messages that speak directly to our clients, who are hungry for more knowledge and better understanding. In my outside life, I am a keen photographer and, like others in the team, I have a passion for the outdoors, hiking and mountain biking. I also train in martial arts and have been known to wield a sword on occasion.
Disclaimer: I am not a financial adviser and what I have shared is general advice that has been peer-reviewed by my team. As always, make a time with our financial advisers for expert advice about your own situation.
Always get professional advice
The information shared in this post is meant to be general guide to support you on your journey. When making important decisions about your finances, we encourage you to seek independent financial advice first, tailored to your unique situation. As well as talking with a financial adviser, make sure you talk to your lawyer and accountant too – together they'll help you find the best solution for your specific situation. Our knowledgeable financial advisers are here to help. Check out our website for the details about our financial advisory services in our disclosures https://www.velocityfinancial.co.nz/disclosure-statement.