How much money do you need set aside to be able to stop earning?
There are a number of factors that need to be taken into account when you are making these assumptions
- How much do you think you will receive from New Zealand Superannuation and for how long
- Will you work part time?
- Will you receive an annuity?
- What will your tax rate be?
- How much will you be spending on travel and for how long?
- Will your costs reduce as you get older? The research indicates that your costs are likely to fall from age 75 or 80.
When you work out how much income you need you can work backwards to work out the lump sum that you need to have invested to fund your retirement.
Protecting your income
Because your income is vital throughout your life, it is important to make sure that your income will continue from an income protection insurance policy or mortgage replacement insurance policy (or that you have trauma insurance cover) in the event that you are unable to work because of illness or injury. These income protection insurance policies work in conjunction with ACC, as there are many reasons that you might be unable to work that are not covered by ACC - for example, stroke, cancer, heart condition.
This should be your core insurance policy during your working years. There is a big difference in the quality of these insurance policies, for more information on getting the right one sorted for you, contact us by emailing firstname.lastname@example.org.