Why Kiwis Don’t Plan For Retirement
Retirement planning is not something that many Kiwis think about until they are starting to consider retirement. By then, it is too late to build up a sizeable nest egg.
So, why do we wait so long to think about our retirement needs? Behavioural psychologists suggest that we find it hard to see our future selves as anything more than strangers. We, therefore, prioritise living the best lifestyle we can right now over having our basic needs met in the future.
People don’t even know the answer to fundamental questions like how much money they would need to save up to be able to retire. If you don’t even have a goal in mind, how can you ever save the amount you would need to?
But planning is essential if you want to have your pick of retirement villages in Christchurch. If you don’t have enough money to go into a high-quality retirement village, you’ll end up at whichever one you get sent to.
One of the reasons that Kiwis don’t plan for retirement is a belief that NZ Super will look after them. However, there are a few issues with this approach. The first is that NZ Super has already raised the age for obtaining a pension and may continue to do so. The further out this age is pushed, the more you will have to save by the time you want to retire. Additionally, NZ Super may not be around forever. It is vulnerable to a change of government, and at some point, they may decide to abolish it altogether. Then you’ll be left without hope of a comfortable retirement unless you have the means to provide it for yourself.
There is no better time to start planning for retirement than right now, no matter what age you are. The earlier you start saving, the better, so that you can take advantage of high growth funds and compound interest.