WealthDesign

 Recently in the NZ Herald, some top financial commentators have highlighted five common misunderstandings held by New Zealanders. Here’s our bite-sized overview:

To join KiwiSaver you have to have a job

No!  KiwiSaver isn’t just limited to the employed.  Anyone under 65 can join KiwiSaver – employees, self-employed, stay-at-home carers, beneficiaries, and kids.  As long as you have permanent residency in New Zealand you qualify. 

The government has your money in an account

Again – no!  It’s your money.  There are many KiwiSaver funds, operated by fund managers who are investing the funds for the members.  Only the individual members can access their funds (for first home purchase, or once they have reached 65), as the accounts are held in the members’ names only.  In essence it’s like your money in your bank account – the only difference is, you can’t take out money, you can only put it in.

You have to get out at 65

Yes it’s true that if you remain working after 65, your employer doesn’t have to contribute any longer, and you also won’t receive member tax credits from the government. However, you don’t have to shut up your KiwiSaver account, you can use it as a tool to manage your finances.

It’s a savings account

No, you can’t withdraw funds whenever you want.  You can use the money for a first home deposit, or under hardship circumstances, although neither is a guarantee that you can withdraw funds; there is fine print. If you join between the ages of 60 and 64, you need to leave your money in KiwiSaver for five years.

You get the best return in default funds

Your KiwiSaver needs managing, pure and simple.  Funds can fall in value and it’s important to seek out professional advice from a reputable, authorised financial adviser.  Once a member of KiwiSaver, you essentially become an investor.  Investors get financial advice to maximise their investments.  This isn’t an expensive process (which is perhaps another common myth held by many New Zealanders!).

We can explain KiwiSaver in a way that it’s simple and relevant to your personal situation.  Also, we believe no question is a silly question.  Give us a call!

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Research shows that there are fewer than 1800 financial advisers authorised to give personalised financial advice in New Zealand. The scary thing is,  of these only around 360 are non-aligned or not linked to product providers, banks or insurance companies.  This minority aren’t allowed to advertise that they are independent.  So where do you go to get impartial, quality advice?

In my opinion, being authorised might allow you to give advice but this shouldn’t be the minimum level of qualification one should have, to provide quality advice. There has always been an education pathway before the latest round of regulations.  People should look for those advisers who believe in further education and who have demonstrated this by becoming either a CLU or CFP. These designations carry a higher qualification that AFA, providing their clients with the best quality advice in the market.

I advise you to ask what qualifications your potential financial adviser has.  It’s your life, so shop around to make sure you have the best adviser, someone that you’re comfortable with, and who is well qualified. 

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The increasing number of retirees and the increasing longevity of these retirees will create opportunities and challenges. Expect to see changing spending patterns within the economy as the power of the grey wave starts to hit. Healthcare, travel and entertainment will be likely winners.

The investment conclusion from all of this, the grey wave is going to want more income assets that provide long term inflation hedging.

For more information about planning into your future, give us a call.

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Last week I attended a conference focusing on the aging revolution, specifically the effect of the baby boomers as they start hitting retirement. There are three classes of retirees; we have the Go-Go, the Go-Slow and the No-Go retirees. They have different spending patterns and needs. I have found an amazing bit of software to help these people plan their finances as they move into retirement. This is a personalised solution based bit of software. You can add in your assets & liabilities, income and financial goals. You can add variables and come away with a clear financial picture of your own personal retirement situation. It is also really good for those tail-end baby boomers planning their savings or working out when they will become financially independent.

If you would like to sit down and work through this process, give me a call as I am excited to share this journey with anyone who is interested.

John Barber

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We know about yuppies (young professionals living a luxurious lifestyle), dinkies (double incomes no kids) and now we have dippies – not drunken Lincoln or Massey students,  but over 65 year olds,  still working (double incomes, plural pensions).  These dippies think 65 is the new forty – not a bad mind-set, I think!  These guys are people over 65, still working and, in some cases, still caring for young children (thanks to a second time around marriage/partnership). But, they are collecting the pension.

Today over 55 year olds comprise 24.7% of the population but own 54% of the nation’s wealth. In 2031, baby boomers will make up 32% of the population and hold even more of the country’s wealth. We are working harder, staying in our jobs longer and focusing on staying  fit and healthy.

 Are we going to out live our money?  What does your retirement look like? 

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