Liz Koh: Cash fit at each life stage

One of the questions most frequently asked of financial advisers by clients who are mid-way through life, is "Am I on track?"

Although it is not exactly a mid-life crisis kind of question, it seems to arise at about the time people realise they are past the halfway point to retirement.

Your financial journey through life is a bit like running a marathon. When you are young and carefree the retirement finishing line is somewhere in the hazy distance and it seems you have all the time in the world to get there.

About halfway through, you look around to see how you are doing in comparison with your peers running the same race and notice that some of them have streaked ahead. As the final straight looms, you realise that, despite a final burst of energy, your place in the race has been all but determined by how you fared in the earlier stages.

However, when it comes to your financial journey it is much harder to judge where you rank against your peers.

Here are some simple checkpoints for the end of each decade of your life:

20s: You've got through without incurring short-term, high-interest debt and you now have a sizeable sum in your KiwiSaver account.

30s: You've saved a deposit for a house and set money aside for emergencies.

40s: You've paid off most, or all, of your mortgage.

50s: You've built up a diversified investment portfolio in addition to KiwiSaver.

At retirement: You and your partner have an investment portfolio of about $150,000-$200,000 which will add another $10,000 to your combined annual income after tax of about $28,000 from NZ Superannuation.

Achieving these targets will make you a front runner at the finish line.

Liz Koh is an authorised financial adviser. The advice given here is general and doesn't constitute specific advice to any person. For a free disclosure statement ph 0800 273 847.