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Poor planning slows retirement

A lack of financial planning may be contributing to the growing number of people working past the traditional retirement age of 65, financial advisers say.

Monday, February 10th 2014, 6:00AM 3 Comments

by Niko Kloeten

But while some superannuitants are continuing to work out of necessity, others are doing so for non-financial reasons.

New data from the latest Census shows two out of five 65 to 69-year-olds (40%) are still working in either a full-time or part-time capacity.

Meanwhile, more than one in five 70 to 74-year olds (21%) was still employed in 2013.

Both numbers were up from the previous census in 2006.

Labour has used the Census figures to support its policy of increasing the age of eligibility for superannuation, which it intends to raise over time from 65 to 67, starting from 2020.

Separate statistics show life expectancy in New Zealand has now reached 80 years (79.1 years for men and 82.8 years for women), meaning the average person can expect to live about 15 years beyond the current age of eligibility for superannuation.

Vicki Watson, director of Diversified Investment Strategies, said there were a variety of reasons for people still working after 65, with some doing so for financial reasons and others for the “pure enjoyment” of it.
“I know on a personal basis a group of friends that work a couple of days a week.  I’ve got one who is 69 who works three days a week because she has to, while another one works as a receptionist a couple of days a week and it just subsidises their income.

“Some do volunteer work, such as helping women with cancer, one does radio announcing, and one even does police work.”

Watson said some of those who were forced to keep working due to financial circumstances could have been helped by getting financial advice at the right time.

“They never get into a position where they go to a financial planner.  They’re busy rushing trying to keep abreast of things and they struggle to save… this is where I think KiwiSaver might help."

Neville Caird, a New Zealand Financial Planning adviser based in Dunedin, said boredom was one of the reasons people went back to work after starting retirement.

“I’ve seen many examples in the past of people that have given up because of forced retirement at a particular age and they’ve been bored to tears and wanted socialising.”

Caird said discussion about whether clients would want to continue working past 65 was a central part of financial planning. “There’s a number that will be doing investment advice well and doing good numbers but not ever establishing those sorts of things.”

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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Comments from our readers

On 10 February 2014 at 10:17 am Richard Renfrew said:
I have a client, a GP, who retired last year at the age of 83. He was working 2-3 days a week, not because he needed the money. I also have a 68 year old who is still working and last year one of the staff in her section retired at age 73.

They weren't working because they needed the money. I suspect the main reason was for social contact. Think about the CEO, one minute you're important, respected, and sort after for advice. The next day you're a nobody, forgotten. I have seen this in our own profession.

We are all different mentally and physically. The problem with raising the retirement age is that this is OK if you are behind a desk but if you are a manual worker, such as a plumber or electrician often the body has given up , sore knees and back problems.

The way to encourage people to work longer is to offer a sliding scale on the retirement benefit. Keep the retirement age at 65 but the longer you work the higher your retirement benefit.

Address the issue; the country can't afford it through KiwiSaver. The savings for many in KiwiSaver will help but will not be sufficient to provide a comfortable retirement income.
Our (Alison's and mine) philosophy is to continue to work until we are physically or mentally unable to but to enjoy the journey along the way and not get burn out.
On 12 February 2014 at 1:12 pm traveller said:
It's easier for people who have some control over their working life to plan for retirement. Those who don't may be forced to go "cold turkey" ie one day full time, the next day retired. But everybody needs to give some thought to being physically and mentally active in retirement is vital and its not as if there is little or nothing to do. Clubs and community organizations abound and many need volunteers to help the less fortunate; and just walking helps to keep one fit. Financial planning for retirement is one thing, keeping an active life going is equally important.
On 12 February 2014 at 1:13 pm traveller said:
It's easier for people who have some control over their working life to plan for retirement. Those who don't may be forced to go "cold turkey" ie one day full time, the next day retired. But everybody needs to give some thought to being physically and mentally active in retirement is vital and its not as if there is little or nothing to do. Clubs and community organizations abound and many need volunteers to help the less fortunate; and just walking helps to keep one fit. Financial planning for retirement is one thing, keeping an active life going is equally important.

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