Mary Holm: Making the retirement money issue easier

There are lots of ways you can make retirement easier financially. Photo / 123RF

Mary Holm is on holiday until January 26. While she's away, we're publishing edited extracts from her new book Rich Enough? A Laid-Back Guide for Every Kiwi.

There are lots of ways you can make retirement easier financially. One obvious way is to retire later.

While younger readers are likely to find that NZ Super will start at an older age than 65, many people are already retiring later than that age anyway.

This is no doubt partly because people in their mid 60s tend to be healthier than a generation ago, and they expect to live longer.

Workforce participation – part-time and fulltime – for people aged 65 and over has soared in the past 30 years or so.

According to Stats NZ, from 1990 to 2018, the percentage of people aged 65 to 69 in work more than quadrupled — from 10.2 per cent to 44.5 per cent.

And the percentage of people aged 70 and over in work more than tripled from 4.4 per cent to 13.6 per cent.

And the numbers, and percentages, of older workers are expected to keep rising.

Working in your late 60s may become the norm.

Continuing to work has strong appeal for some people, and the opposite for others.

In a 2018 survey of people aged over 65, BNZ found two-thirds want to keep working because of the "value and satisfaction it brings" or the ability to use their skills and talents.

And more than half want to work for the social contact.

However, close to a third said they need to work to get the money to pay their bills.

Whether you want to keep working or have to keep working as you get older, there are two pluses to doing so. For every year you keep working:

• You can save for one more year.
• You have one less year of retirement to fund with your savings.

Because of this double-barrelled effect, continuing to work past the usual retirement age can make a surprisingly big difference to how much you need to save for retirement.

How much? I worked through an example for a 50-year-old regular saver on an online retirement savings calculator.

The relative spending numbers are what matter. I found:

• If that person retires at 65 they could spend $610 a week from their savings.
• If they retire at 67 it would be $730 a week.
• And if they work until 70 it would be $970 a week.

That's more than one and a half times the amount at age 65.

"That's all very well," you might be saying. "But I'm not sure I'll be able to keep my job as I get older."

There's no doubt that some employers discriminate on the basis of age.

But you don't have to keep the same job, or even the same type of work.

What are you good at or love doing? Turn what was an interest into a part-time job. I've known people to make good money consulting, tutoring or teaching their hobby.

How about setting yourself up as a cake decorator or home handyman? One former chief executive of a large company thoroughly enjoys mowing lawns in his suburb, and chatting with the residents in the process.