You might have a retirement lifestyle in mind, and some retirement savings. But will they meet in the middle or will there be a gap to bridge between your funds and your dreams? Although a retirement shortfall can feel stressful, you do have options.

The first step is to identify your non-negotiables. Is that the house, the travel, the new car or the grandkids’ university fund? Once you know how much you need, you can make a plan. That might include earning more, spending less, downsizing, or changing your investments – or all of the above.

Small KiwiSaver sacrifice now adds up later

If you’re still working it’s worth calculating the difference between KiwiSaver contributions. Let’s say you’re 55 years old, earning $100,000 and your current KiwiSaver balance is $70,000, in a growth fund. You might barely notice a 1 per cent increase in contributions, or even a 3 per cent increase, but you’ll certainly notice the difference in savings at age 70.

‘I wish I’d downsized sooner’

Downsizing can be a powerful tool to improve your cash flow and lifestyle in retirement. There’s a natural urge to hang onto enough space to fit everyone in case of an apocalypse or that full family reunion. But that could be putting a huge crimp in your ambitions.

Consider those non-negotiables: if your heart is set on that trip or that classic car, and you can also afford to keep your family home, then that’s great. But if you can’t afford both, why not get a smaller property or one in a different location? When our clients do this, the main feedback we get is that they wish they’d done it sooner.

Do the kids really need an inheritance?

With a life expectancy of 81.7 years, we’re living longer. We’re also having our kids later, with women aged 30.5 on average when they have their first child. That means the child will likely be in their 50s when they receive their inheritance.

My view is your kids shouldn’t be in their 50s and relying on your inheritance to support them – you should do what you want with your money and plan for it to run out by the age of 85 or 90. Once you reach that age, NZ Super should be enough to live on if you make it to the full century.

Many New Zealanders work beyond 65

We have one of the highest rates of workforce participation for those aged 65-plus*:

All your money doesn’t need to be in term deposits

Being retired doesn’t mean your money can’t keep working for you – there’s no reason to pull out of your investments. Instead, consider a three buckets strategy: money you need over the next five years in your short-term bucket; money needed five to 10 years from now in your medium-term bucket; and money you’ll need in over a decade in your long-term bucket. Each bucket needs to be managed differently; a more growth-oriented approach can be taken with money in the long-term bucket, while money the short-term bucket would need a more conservative strategy. Ideally, speak to a financial advisor to help you map out your spending and investing, bridge the gap and come up with a plan for how to maximise your funds so you can enjoy the best retirement possible.

Ageism seems to be declining

Working until 70 gives you a buffer, but I am a fan of people being able to enjoy their retirement – it comes down to how much you like your job. Many of us get a real sense of meaning from our work, we love interacting with different people, and the money is also a nice bonus.

If you’re considering working beyond age 65, the good news is that ageism in the workforce seems to be in decline. The shortage of skilled workers and the quicker turnover of roles is helping older Kiwis find great jobs. And for those who are just looking for something casual, there’s far less stigma around older people working in hospitality or retail.

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This article provides general commentary only and is not, and is not intended to be, financial advice as defined in the Financial Markets Conduct Act 2013. It does not fully consider your personal financial situation or goals, does not recommend a particular investment product, and is not a substitute for obtaining financial advice from a Financial Advice Provider.

Booster Investment Management Limited is the issuer of the Booster KiwiSaver Scheme, Booster SuperScheme, Booster Investment Scheme, Booster Investment Scheme 2 and the Booster Innovation Scheme. Product Disclosure Statements are available at www.booster.co.nz