Dyman Associates Group of Companies, Tips for funding your retirement

How will you fund your lifestyle frills post retirement? How are you going to afford that yearly cruise once you retire?

The Commissioner for Financial Literacy's 2013 review of retirement income policies found there is an increasing gap between the standard of living that we aspire to when we retire and the standard of living we can afford on New Zealand Superannuation.

New Zealand super for a single person living alone is $357.42 per week after tax. For a married person or someone with a partner New Zealand super provides $549.88 after tax.

While super has been found to be sufficient to provide a no-frills standard of living, it's up to us to make up the difference and pay for the frills we want in our life once our working days are done.

The Commissioner for Financial Literacy suggests we need savings of about $205,000 for a 25 five year retirement on top of New Zealand Superannuation. The New Zealand Financial Services Council estimates we will need more like $300,000 to $450,000 - per person.

There is a wealth of advice available for those thinking about how they will fund the frills in their retirement.

To help you start here are five things to think about when planning for your retirement.

Start early. Or just start.

Personal financial trainer Hannah McQueen says many of us are afraid of the "r" word.

McQueen had a client come in to see her this week. Her client was 60 and you would think well advanced when it came to saving and planning for retirement.

Not so, says McQueen, and this client's attitude to retirement is frighteningly normal.

"People think that by doing nothing they are avoiding making a decision, but doing nothing is a decision," she says.

While it's a good idea to start saving for your retirement early because the benefits of compounding interest started early is one of the easiest ways to grow your retirement savings, McQueen says the important thing is to start.

If you are nearing retirement hope is not lost.

Authorised financial advisor Martin Hawes says somebody in their 50s or 60s still has time.

"And these are often your best earning years."

Have a goal

Hawes says setting a goal is one of the most useful things to do before retirement.

But before you do that you need to work out how much your life of leisure will cost.

McQueen says people often don't know how much their lifestyle costs and if they take an educated guess its phenomenal how wrong they are.

"Pretty much everyone's lifestyle costs more than they think."

A 2013 poll found 53 per cent of New Zealanders wanted a weekly income of up to $300 per week on top of superannuation payments.

Now sit down with a piece of paper. Write down all the things you like to do on a regular basis and the costs.

Then think about the things that you want to be able to do regularly in a week when you are retired whether it's a coffee date at your local cafe or taking in a new movie.

Add in special trips or events you want to do, like a yearly cruise, and tally the cost.

Then factor in all the boring expenses you need to pay to live per week, including food, housing, transport.

Add it together and you should have some idea of how much you need above New Zealand super to live a lifestyle you will enjoy.

Hawes says you should also think about minimising expenses in retirement. For example, you could get rid of your life insurance or income protection insurance.