WealthDesign

Each year, the government will contribute 50 cents for every dollar you save in your KiwiSaver, with the maximum contribution being $521. To get the full amount of $521 you need to have contributed $1,043 in the twelve months prior to the cut-off date of mid June.

Even if you haven’t contributed the minimum of $1,043 up to this point, you can add a lump sum prior to the cut-off date to take you over the threshold – this will give you the full contribution of $521.

It may not seem like much, but it’s what being a ‘kiwi’ who is saving is all about!  For example a  24 year old in KiwiSaver,  who is over the threshold of $1,043 yearly (and therefore receiving the full $521 contribution), could end up with as much as $50,000 more in their retirement fund, when they reach 65. 

Be the optimal ‘kiwi’ saver by giving us a call.  We’ll help you to save smart – easily and relatively painlessly.

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The tax rules are reasonably clear but many New Zealanders still pay more than they need to and miss out on thousands of dollars in refunds.

Here are some simple tips:

1. Make sure you claim for any donations, especially school donations.
2. If you have income replacement insurance, make sure you claim the premiums, as there is a deduction for these as well.
3. If you are paying for financial planning advice, you can claim for this.
4. Make sure you have the right tax rate on your KiwiSaver. If you haven’t and you are paying too much, the IRD will not refund you, but if you’re not paying enough, they will charge you.
5. Make sure you are paying at least $1043 every year into KiwiSaver. This means you are getting a $521 tax credit. If you are not in KiwiSaver, on contribution holiday or paying below this level, you are missing out on a tax refund.
6. Check the ‘working for families’ entitlement. This is a great scheme but it can have a bite to it, if your income goes up. Make sure you get it if you are entitled, but don’t collect it if you aren’t. The IRD will come looking for you.

We’re financial advisers, not accountants, but we can help get the information you need to make sure you are claiming what is rightfully yours. For specialist advice we suggest you talk to a qualified accountant.

John Barber

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Financial planning – just for the oldies right?  Not so much!  If you’re generation Y, just finishing university, finished your apprenticeship or starting out in the working world, there are a few financial planning issues you need sorting.

Firstly it’s wise to be in KiwiSaver, as soon as you join the workforce. This is one of the four pillars of financial success. You need to understand the first home subsidy rules and how KiwiSaver works. You’ll be targeted by the bank teller who is trying to meet his/her daily KPIs of selling a certain number of KiwiSaver plans, but it pays to get valuable, qualified advice. You really need to understand what you should invest, and why you should invest in the right fund – and your local bank teller is not qualified to give such advice.

You need to make your first Will and get an understanding around the relationship property rules.  A good lawyer will help educate you on the basics. (As part of our role, we team you up with the right people, to support you on your financial journey.)

Lastly you need to get your insurance in order. If you’re off travelling or working outside of New Zealand, getting insurance set up is vital. The sad fact is, if you work globally and something goes wrong, financially you can be clobbered.  The good news is this isn’t a costly exercise. 

Quality, objective financial planning advice pays dividends.  It’s also empowering you to take control of your own life – getting the basics tidied up to bring you peace of mind – freeing you up to go and live your life, however that looks for you.  An initial chat is always free of charge, so it’s well worth a call to us at WealthDesign, to tee something up. 

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The media has invented the phrase ‘housing crisis’ and repeated it so many times that many now believe we have one. Yes, people are buying houses off each other in some parts of the country for ridiculous prices; even an uninhabitable villa can go for $1,000,000 in Auckland. But that doesn’t mean we have a crisis.

Auckland has a supply issue, particularly with land – which makes up 60% of the cost of a new house in that city. In Christchurch, where over $3,000,000 a day is pouring in from insurance funded repairs and new builds, there is a mega-boom going on. That also doesn’t mean we have a crisis.

Veda have said that people aged under 28 are borrowing more often for personal loans and credit cards and less for mortgages. With four consecutive Official Cash Rate (OCR) hikes this year, the well-publicised 20% deposit requirements and constant reporting of this so called ‘crisis,’ who could blame them?

Since the previous boom peaked in 2007 house prices in 16 areas across New Zealand have increased, but have fallen in 37 and remained stable in 19 – including Palmerston North. Around Manawatu there are plenty of houses under $200,000 that would be suitable for first home buyers, and if you look just outside Palmerston North, there are several small towns that offer houses for even less.

With KiwiSaver’s first home withdrawal, Housing NZ’s first home grant and the Welcome Home Loan Scheme, many people are still buying houses. There are many more who may not even be aware of just how close they already are – banks are still able to lend to 90% (just not all the time), and the LVR restrictions do not apply to new builds (so a 5% deposit may do it).

Some in the media have been saying that first home buyers need to reduce their expectations around how much they can spend on a home, where that home should be and the size and type of property they can buy first up. There is merit to that, but there is far too much misinformation out there too.

Rather than giving up, people just need good advice. They need to speak to someone who knows what is really going on, and who has a sensible and realistic approach. Give us a call – we help make the complicated simple.

Regan Thomas

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Think again. Financially, working to age 70 can really help to top up the retirement savings. This is a really important point for some baby boomers, as they haven’t had time to build up a large nest egg in KiwiSaver.  So for those who are heading towards New Zealand Superannuation in the next 15 to 20 years, perhaps it’s time to reconsider all your options.

Working until age 70 can add around $80,000 to a savings plan (if the extra cash from New Zealand Superannuation is just saved for the extended period of one’s working life). When this is added to KiwiSaver, plus a bit of extra savings, the retirement plan starts to come together.

In my opinion, this is a real win-win. Many people aged 65 and over are highly skilled and add much to the New Zealand economy and society by working longer. There are even studies that show working longer is good for your health.

Financial planning isn’t about chasing the best returns – it’s about having a strategy to help you live your best life. If you are 50 plus, it is time to sit down and consider your options as you plan for what the next 20 – 30 years will bring.

John Barber

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