The unexpected secret to a happy retirement

Growing numbers of people are reaching retirement and realising there’s one thing they can’t live without: their job. And the reasons might come as a surprise.

BNZ’s Financial Futures research found that nearly one in two (46%) New Zealanders want to keep working past 65, with two thirds of those over the age of 65 wanting to keep working because of the value and satisfaction it brings. Other important factors are the ability to use their skills and talents (68%) and for social contact (57%).

Paul Carter, BNZ’s Director of Retail and Marketing, says: “Many people are fitter and healthier in their 60s and 70s than previous generations and more are keen to keep working for longer.”

For many New Zealanders, it’s a question of balance as they get older: only 18% plan to work full time, with 31% preferring a part-time job, giving them time to enjoy other activities, including travel and spending time with their children and grandchildren.

“Working longer opens up all kinds of opportunities for people, including changing the way they view their finances,” Mr Carter says.

But the reality for 31% of respondents is they need the money they’ll earn past 65 to pay their bills.

“While we know it can be tough for those who have to keep working to pay their bills, it’s great to hear that so many more people continue because of the positives about work.

“I think the gap between those who choose to work in retirement and those who have to is too high. There’s a real opportunity for people to narrow that gap by being more proactive about planning their finances,” Paul Carter says.

BNZ Agribusiness banker Paul Buist, of Hamilton, is 76 and has worked for the bank for 26 years. He has chosen to continue working.

“For Paul, it is all about the joy of coming to work and making a valuable contribution to his customers’ businesses and to BNZ,” Mr Carter says.

“Paul told me he’s seen some hard financial times over the years and he’s learnt that to ride out the tough times you need to have a financial plan. So his top tip to Kiwis is to set yourself financial goals and follow a budget each month. That’s the voice of experience talking.

“I recommend people start with doing what they can to get on top of their debts, give their mortgage repayments the once-over and check to ensure their KiwiSaver is working hard for them,” Mr Carter says.

“Having your finances in a good state so you can make a choice to work in later life means not being complacent now,” he says.

The research found almost three-quarters (72%) of people are confident they will pay off their mortgage before they retire or semi-retire, despite the indication that we’re settling down and buying a home later in life.

Others have plans in place to pay off their loans after 65, by selling up and buying a cheaper house (37%), from savings (31%) or dividends from investments (26%), among other tactics.

“We are still benefiting from some of the lowest interest rates in a generation, so now is the best time to look at your repayments to see how you can speed up saying goodbye to your mortgage,” Mr Carter says.

“Even simple things like changing from monthly to fortnightly payments will cut the length of your home loan, without feeling the pinch,” he says.

BNZ has some easy-to-use calculators that show how much can be saved off the overall length of a home loan by making some adjustments.

For example, a 30-year home loan of $560,000 at 4.65% presently could be cut by more than four years and $75,700 by lifting the fortnightly repayments by $100.

The majority of people (57%) believe they will depend on superannuation investments, either company or KiwiSaver, to fund the life they want in retirement.

“KiwiSaver is such an important component of people’s plans for funding retirement – so make sure you not only enrol in KiwiSaver, but make an active fund choice and take an interest in the fund where you are invested,” Mr Carter says.

“All of these tactics will help in achieving the retirement you want and deserve,” he says.