Retirement Planning

‘”It’s choice, not chance, that determines your destiny”.  Jean Nidetch

There is no silver bullet for investing long term.  A ‘get rich quick’ scheme can see you win and lose very quickly.  The fable of the tortoise and the hare comes to mind when thinking of retirement planning.

Retirement planning can ideally consist of having various assets that provide you with a passive income in retirement.  These may be property, superannuation schemes (including your KiwiSaver account), cash, bonds and shares (or a variance of these).

You do not need superior knowledge of ‘hot stocks’ when it comes to shares or bonds, nor do you need to know when the best time to invest is.  You need a plan of what you want to achieve and by when, and then focus on the steps to get you there.  It takes commitment, discipline and the right advice and support along the way.  The compounding effect is often described as the eighth wonder of the world, or as Einstein put it, “The greatest mathematical discovery of all time”. Compounding is a function of earning investment returns on accumulated returns.  Consider the following graph where Jack has $20,000 to invest and he invests it for 15 years.  At the same time Jill also invests $20,000 and does so for 30 years.  Both earn the same rate of return at 5%.

15 Years

21000 Complete
25000 Complete
30000 Complete
42000 Complete

30 Years

21000 Complete
36000 Complete
58000 Complete
89000 Complete

At the end of 15 years Jack has $42,274, so additional accumulated returns of $22,274.

Jill on the other hand, has $89,354 at the end of 30 years, of which $69,354 is accumulated returns.

Neither did anything other than sit back and watch their money grow.


KiwiSaver is a big part of retirement planning for New Zealanders.  Knowing which fund to invest in is usually the first hurdle as there are many providers and funds to choose from.  Once the provider is chosen, knowing whether you should be in a conservative, balanced or growth fund is the next obstacle.  Everyone has a different risk profile, some value slow, steady, dependable gains, others enjoy more volatility.  We can assist you in working out where you sit along the graph. You then need to choose your level of contribution.  Everyone’s situation varies according to income, employment situations and other commitments.  A KiwiSaver account may be the only self-funded retirement income many New Zealanders accumulate and it is important to try to get it right early, as it can prove costly in the long term.


Handy Tip

Visit the retirement commissioner’s website and play around with the retirement calculators available. There are many useful tools on this website and booklets are available to assist you in making sound financial decisions.