Liz Koh: Organise a timetable for your retirement

Let's face it, when you are a 20-something your priorities are to find your way in life and have a good time

Let's face it, when you are a 20-something your priorities are to find your way in life and have a good time. Many books on retirement planning suggest you start thinking about planning your retirement when you start your first job.

Although it is true that the sooner you put plans in place for the long term the better off you will be, it is unrealistic and impractical to start planning too soon.

Let's face it, when you are 20-something your priorities are to find your way in life and have a good time. For most people of this age it means doing nothing more about retirement planning than joining KiwiSaver.

Later in life, priorities shift to buying a house, paying off the mortgage and ensuring children get the best possible start in life. There is no need to feel guilty during these stages about not saving more for retirement than what you are contributing to KiwiSaver.

The priority should be to get rid of all debt in as short a time as possible so as to have enough years left before retirement to build up your savings. If you can do this by around the age of 50 you still have a good 15 years, which is a long enough timeframe to invest in volatile, high-return investments.

Five years out from retirement is when you need to really accelerate your retirement planning. Start by setting your retirement goals, focusing first on how you wish to spend your time then quantifying how much you will need to achieve your goals.

Work out a retirement budget for your everyday costs and a budget for one-off costs such as travel, home maintenance and replacing your car.

Aim to live on your everyday retirement budget for at least five years before you retire to give you time to adjust to a lower level of spending while maximising your savings.

* Liz Koh is an authorised financial adviser. The advice given here is general and does not constitute specific advice to any person. A disclosure statement can be obtained free, call 0800 273 847. For free e-books see moneymax.co.nz and moneymaxcoach.com.