Getting comfortable spending capital in retirement

NZ Super isn’t enough for most retirees and they need to rethink how they fund their golden years

Recent inflation figures show a welcome slowdown in the pace of price rises. However, NZ Superannuation simply isn’t enough for most retirees and they still need alternative sources of income to fund a comfortable living standard in retirement.

In most cases, this means gradually drawing down accumulated capital, according to Glyn Lewis-Jones from Castle Trust Financial Planning.

“The hard part is working out how to turn a lump sum into regular, long-term ‘income’ to supplement NZ Super,” Glyn says.

Term deposits are not the answer

“Many people consider term deposits for a low-risk return on their capital, or managed funds that focus on income-generating assets like bonds and dividend-paying stocks,” Glyn says.

“However, once you factor in inflation, term deposits really aren’t suitable for money you are storing for the long term – money which might not be spent for 5, 10, 15 or more years.

“More importantly, living on the interest from term deposits ignores one of the key factors in optimal retirement planning – the sensible spending of the capital itself to enhance living standards over the long term.

Spending your capital – start with a plan

“Combining a sensible investment strategy to grow capital, with the careful, calculated decumulation of that capital over the long-term is the most powerful way to bolster retirement income.

Retirees need to get comfortable with using their capital in retirement to help fund a decent standard of living. This is precisely why they spent decades working hard to save it! Glyn and the team at Castle Trust Financial Planning help with exactly this – putting a plan in place to balance spending and investment. “We give our clients personal ‘Spending & Investing Plans’ which reduce uncertainty, help decide how much it is sensible to spend and how to look after their capital until it’s ready to be spent.”

Giving people the freedom to spend without fear of running out during retirement. Now wouldn’t that be a comfort?

Your better financial future starts here

Your better financial future starts with a conversation with one of our financial experts. We offer 30 minutes free consultations to help give you peace of mind that we can help you where you need it most.
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Phone: 03 544 1428
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