(Spoiler alert – you do). Stuart Williams from Amova explores the importance of having a million tucked away post-retirement.

A million dollars has always had an almost mythical ring about it. However, according to the latest Massey University Retirement Expenditure Guidelines (REG) report, this is truly how much we’ll need to have saved by the time we retire, should we simply wish to continue enjoying our later years in the suburbs we’ve loved to call home.

The report lays out what for many will feel like Hobson’s choice: enter retirement with at least a million dollars tucked away to continue to enjoy a lifestyle around our main centres it qualifies as “choices”; or prepare to endure a retirement it rather ominously refers to as “no frills”.

I don’t know about you, but I don’t envisage retirement as being a time when work is replaced by worry. I will want the freedom of choice – to socialise, travel and spend time with family wherever they may be in the world. Here’s the thing, though. Ensuring we have the luxury of choice in the future depends greatly on the choices we make right now.

Is your KiwiSaver working hard?

Twenty years on from its launch, KiwiSaver is now firmly embedded as the foundation of most New Zealanders’ retirement planning. In fact, it’s estimated that around 90 per cent of our working population participate in the scheme, and between us, we’ve managed to build a collective pot of around $130 billion.

Clearly, awareness is not the barrier to our future personal wealth creation. But with over three-quarters of this $130 billion having been invested without any personalised advice or strategy, understanding quite possibly is. Therefore, the most important question you can ask yourself – and then your adviser – right now when it comes to planning for your retirement, is “could your KiwiSaver be working harder for you”?

Just as times have changed to make having a million more mainstream, so too has the cadence of our adult lives. The “norm” of previous generations: of a first home, 2.4 kids and a carefully plotted career path all sorted by the time you exit your 20s, is now anything but. Societal shifts and the cost of living – and houses – means that the new norm for many is still working towards first-home ownership well into your 30s … and needing to clear your KiwiSaver to achieve this.

This then means starting over from a near-zero balance to build a meaningful retirement fund. And with the need to accelerate your savings, a conservative – or even a default balanced – KiwiSaver strategy will simply not get you there in time.

High-growth strategy

While your time frame may be shorter, time is still on your side when it comes to getting the most out of your KiwiSaver settings. It’s widely recognised that over the long term, equities outperform bonds, and bonds outperform cash. So on the basis that even at the venerable old age of 35 you will have the best part of three decades of earning ahead of you, and therefore multiple market cycles, taking a more growth-oriented approach to KiwiSaver isn’t a risky gamble. In fact, it may be the most practical way to build enough wealth for your retirement.

A high-growth strategy doesn’t mean taking reckless risks. Given time to ride out market cycles, it means being appropriately invested for your time frame through a diversified portfolio that can deliver stronger long-term growth.

At Amova, through our GoalsGetter KiwiSaver scheme and investment portal, we’ve long believed in giving people better access to knowledge and high-quality investment options, tailored to their individual circumstance.

GoalsGetter was originally designed to help everyday New Zealanders understand and participate in the share market. Today, it also gives financial advisers the tools to help you build a diversified, multi-manager KiwiSaver portfolio tailored to your goals, using funds not just from us, but another five of New Zealand’s leading providers.

This approach gives you:

• a broader set of investment options
• a truly diversified portfolio personalised to your needs and profile
• a strategy that gives you the greatest opportunity to grow your balance over time
• access to expertise and market commentary that supports informed decision-making.

Good advice and well-structured KiwiSaver portfolios don’t just help individuals’ future quality of life – they help create a stronger, more financially resilient New Zealand. Therefore, we have focused our KiwiSaver model on empowering financial advisers to take the time to talk clients through their options, to ensure their settings and strategy support them to reach their retirement savings goals. By backing advisers, we feel we also have your back too.

If you want to understand whether your KiwiSaver is set up for the future you’re hoping for – not just a “no frills” one – now is the right time to talk to yours.

This material is general in nature and is not intended to constitute financial advice therefore should not be relied upon. We recommend that you seek financial advice before proceeding to make an investment. We also recommend that you read the product disclosure statement of any financial product that you are considering investing in before proceeding. A copy of the
PDS is available at goalsgetter.co.nz.