Now is the best time to plan for retirement

The sooner you start putting aside money for retirement, the better off you'll be

While retirement may seem a long way away, time is your best friend - so the sooner you start planning, the better off you will be.

As Albert Einstein said, compounding interest really is the eighth wonder of the world.

"Compound interest occurs when interest gets added to the principal amount invested and then the interest rate applies to the new (larger) principal amount," explains financial planner Lisa Dudson of Acumen. "Over the long term it's incredibly powerful."

So you want to start putting aside money as soon as you can, so you can reap the benefits of compound interest.

What am I working with?

First, establish what resources you have to work with. Ask yourself: How much money do I have available to invest? Lisa says you might already have a lump sum squirrelled away, or be able to invest a set amount of your income each month, or you might have an asset you can borrow against for a property investment.

What are my goals?

Create a goals-based investment strategy. What kind of lifestyle do you want in retirement and what might it cost you?

"We are living longer, so you might have many years in retirement," says Lisa. "You might want to work until you are older than 65, or you might want to start working part time much earlier than 65."

Get professional advice

Once you have a feel for when you want to retire, how much you might need to support the lifestyle you want, and what you have to work with, you can start putting an investment strategy together that meets your objectives.

Lisa says: "Get financial advice from a qualified professional, most likely a financial advisor. You want someone to be a sounding board for you, give you ideas to think about and help you create the right strategy to meet your goals."

This is not a set and forget strategy. Lisa advises you to check in with your advisor once a year.

The views expressed are those of the individual featured, speaking in their individual capacity and do not necessarily reflect or represent the views of State/IAG New Zealand. These [advertisements] do not offer specific advice and you are responsible for your own decisions about financial planning, investment and risk. All information presented is of a general nature, merely for informational purposes and is not intended as a substitute for professional and/or financial advice. Should you decide to act upon any of the information presented, you do so at your own risk.

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