It pays to look ahead when planning out your finances. Whether you are trying to find the next property hotspot to make the most of your portfolio or are simply figuring out if you'll be able to retire when you want to, a certain level of educated foresight is always required to make an informed plan.
However, it appears that many New Zealanders still appear to be making a fundamental mistake in this regard: Specifically when it comes to their KiwiSaver. Are you one of them?
A tempting proposition
KiwiSaver is possibly one of the first long-term savings plans that young Kiwis will put their capital into. When you're not old enough to sink your capital into other investments, KiwiSaver offers an easy, consistent way to start planning ahead for your retirement.
Despite the fact that it is a relatively new scheme, it has proven extremely popular. At the end of last year, there were about 1.3 million members with a KiwiSaver account, according to the New Zealand government, with a total nationwide contribution of almost $5 million, just under a fifth of which came from the Crown.
The fact that both your employer and the government contribute to your scheme (assuming you fulfil the requirements) makes it a tempting proposition: but it appears that many of us simply aren't taking it seriously.
The bare minimum
Why is it that only one in five of us have read our KiwiSaver annual statements thoroughly?
If you're a dedicated investor, you will know that it is imperative to consistently check your assets and review their place in your investment strategy. If a particular property isn't quite cutting the mustard for whatever reason, it might be time to sell or find another use for it. The same goes for stocks and shares: your fund manager isn't going to be waiting around while a certain group of assets to weigh your returns down.
So why is it that only one in five of us have read our KiwiSaver annual statements thoroughly? According to a survey from the Financial Markets Authority, the majority of Kiwis haven't taken the time to check their statements properly, and as a result more than 70 per cent of us haven't confirmed if our saving funds are on track for us to produce the income we want at retirement!
Considering the importance that KiwiSaver can play in how and when you decide to stop working, this seems like a pretty significant oversight. But what can you do about it?
Call in the big guns
First of all is the obvious step: Read your statement! Know where you are at and whether you are on track with where you're going. Do some simple calculations: If you keep contributing to your KiwiSaver at the current rate, are you going to have the funds you need to retire at your desired age?
Next comes getting the right help from the right people. The financial market in New Zealand is a complex and convoluted beast – people have spent their whole lives trying to stay on top of it, and based their entire careers around helping people navigate it. If your KiwiSaver isn't quite up to scratch, there are other options to ensure that you can still retire comfortably – you can't save your way into retirement, after all.
If you'd like to knock your finances into shape and get started down the path to retiring when you want to rather than when you need to, make sure you get in touch with one of the team here at Goodlife Financial Advice.
Here's to your financial independence!
Daniel Carney
Authorised Financial Adviser / Investment Property Expert
Contact us now!
0508 GOODLIFE
info@goodlifeadvice.co.nz