For Kiwis in their 50s and early 60s, the cost of living is becoming an increasingly important consideration in financial planning. Even as mortgage rates have started to ease, everyday expenses—from groceries to insurance—continue to rise, prompting many to take a closer look at their finances. This stage of life is a critical period to make decisions that will shape not only retirement security but also day-to-day financial stability.
Why midlife planning matters
People in their 50s and early 60s often juggle multiple financial responsibilities: supporting adult children, helping ageing parents, paying off a mortgage, or rebuilding savings. The combination of these pressures and longer life expectancies means careful planning now can prevent stress later.
Unlike past generations, many are considering phased retirement—reducing hours or shifting to less demanding roles while still earning. This approach eases financial pressure and provides flexibility for a smoother transition into full retirement.
Reassessing debt strategically
Even with falling mortgage rates, debt remains a major consideration in pre-retirement planning. Paying off a mortgage before retirement is often the most effective way to reduce financial pressure, free up cash flow, and give greater flexibility in later years.
Some practical strategies include:
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Accelerating repayments: Making extra payments toward the principal, even modest amounts, can shorten the loan term significantly and save thousands in interest. For example, adding an extra $100–$200 per fortnight can knock years off a mortgage, freeing up money for retirement savings sooner.
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Refinancing or restructuring: Taking advantage of lower interest rates by refinancing or splitting a mortgage into fixed and floating portions can help manage risk. The fixed portion gives certainty around monthly repayments, making budgeting easier, while the floating portion allows flexibility to make extra payments whenever possible.
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Re-evaluating property: Downsizing or selling a larger home can release equity to pay off debt or invest for retirement, improving both flexibility and long-term security.
By focusing primarily on reducing debt before retirement, people in their 50s and early 60s can enter retirement with less financial burden. Using tools like fixed/floating splits is about managing risk and maintaining flexibility, not replacing the goal of paying off the mortgage as soon as possible.
Strengthening savings and planning for future costs
Incremental steps can make a tangible difference in retirement readiness. Contributions to KiwiSaver or a dedicated retirement account—even if modest—can grow significantly over 10–15 years.
Healthcare costs are another area to plan for. Private insurance or a dedicated healthcare buffer ensures unexpected medical expenses don’t disrupt retirement plans.
Taking small, impactful steps
Anne, 57, had been feeling the strain of rising living costs while managing a mortgage and day-to-day bills. She wasn’t struggling to survive, but she wanted to build a buffer for retirement and feel more in control. Already having a modest emergency fund gave her the confidence to start saving regularly without risking her ability to cover unexpected expenses.
She decided to begin small: opening a “Retirement Top-Up” account and setting up an automatic transfer of $50 per week. For Anne, this was a manageable amount, roughly the cost of a daily takeaway coffee, and it allowed her to see her savings grow steadily.
Seeing the account balance rise encouraged her to tackle her mortgage strategically. After consulting her bank, she restructured her loan to combine fixed and floating rates, which reduced monthly pressure while still giving flexibility to make extra repayments when she could.
Although Anne still faces rising costs, these deliberate actions—starting with a manageable savings goal and reassessing her mortgage—gave her a sense of control and positioned her for a more secure retirement.
Planning beyond the numbers
While numbers are critical, midlife financial planning also involves anticipating life changes. Consider:
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How much income will you need if you reduce hours or retire early?
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Are there medical or lifestyle costs that could increase in coming years?
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Could part-time work, consulting, or flexible roles supplement retirement income while keeping you engaged?
Answering these questions allows for a proactive approach rather than reactive stress management.
Seeking guidance
Financial advisers can be invaluable at this stage, particularly for those juggling multiple priorities. Even a single consultation can clarify options around KiwiSaver, debt, or investment strategies, helping you make more confident decisions about your retirement planning.
If professional advice isn’t feasible, free resources such as Sorted, budgeting services, or workshops can provide practical guidance. For those looking for personalised support, reaching out to a financial planner through InvestNow is a straightforward way to get expert advice tailored to your situation. Whether it’s reviewing your KiwiSaver, exploring investment strategies, or mapping out a debt repayment plan, a planner can help you take actionable steps toward a more secure retirement.
Looking ahead
Rising costs don’t have to derail retirement plans. By focusing on debt management, strategic savings, and flexible income options, people in their 50s and early 60s can strengthen their financial foundation. Taking practical, targeted steps now ensures retirement is not just financially secure, but also manageable and adaptable to life’s changes.
