Mind the Gap: A Traveller’s Guide to Retirement Planning
by Bruce Cameron
What do travel and retirement planning have in common? At first glance not much, however, whilst visiting the UK recently I was reminded of this saying at the London Tube stations – “mind the gap”. Most visitors to London have heard the words “mind the gap” when travelling on the tube. It’s important as a wrong step may cause an injury when boarding a train whilst travelling about London and beyond.
The rush of air in the tunnels going from one destination to the next can be quite the experience and exhilarating on the first few occasions. It’s a little like looking at your future life after working for several decades and pondering what adventures await me on this platform? Where shall I visit next? What shall I do? Will I have the funds to do these activities or am I planning to be spectator rather than an active participant in this next set of life’s opportunities?
However, unlike the London underground with its maps and well-marked signs, planning for retirement takes a little more foresight. We don’t plan to wake up one morning at a train station with no funds in our wallets to explore the local attractions.
Financial planning allows you to enjoy life at each stage and plan with confidence knowing when you want to stop work, the retirement income gap challenge is settled. Let’s focus on the existing known income numbers for NZ citizens:
NZ Super Income Gap 2025
| Recipient Type | 2025 NZ Super (Net Annual) | Desired Income | Gap (2025) |
|---|---|---|---|
| Single | $27,998 | $60,000 | $32,002 |
| Couple (Both Qualify) | $43,074 | $100,000 | $56,926 |
What does your graph look like?
The graph illustrates a projected spending shortfall of $72,000 to $108,000 over 20 years, excluding any property value from the calculations.
*Projections above are based on following assumptions:
Desired Income:
| Annual Drawings | Drawings Age Range | Excluded | Portfolio Capital Status at Age 82 | Starting Balance | Portfolio Type | Funding Gap of $33,000 p.a. From age 82. |
|---|---|---|---|---|---|---|
| $36k p.a. | 66–82 | NZ super | Capital is spent/used by age 82 | $500,000 | 60/40 Balanced Portfolio | $72,000 to $108,000 |
Here are some questions to consider with your financial adviser to make sure you are on track for your retirement income:
Am I investing enough now for the income I want when I stop work?
If I had a $200,000 unexpected life expense how would this impact my capital and savings? How would this expense impact my retirement income?
Could I take time off business and work for 6-12 months if I chose, to achieve a personal goal or help a family member, a friend or an organisation you care about?
Are the assumptions I/we made 10 or 15 years ago still the most appropriate for our circumstances now?
If I am buying my first home soon, how quickly can I repay my home loan and provide for a good income when I want to stop work?
Should I invest in residential property and if so, what are the risks?
Am I making the best use of my KiwiSaver contributions?
How much of a legacy do I wish to leave?
Does my current insurance adequately safeguard my long-term objectives and retirement assets?
To consider these answers in confidence so you can enjoy planning and living life on your terms, without a possible income gap at retirement, give Adam or Bruce at Compound Wealth a call.
