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Kiwisaver (longish)

July 3rd, 2007 at 02:04 pm

Kiwisaver is the name of the new retirement savings scheme launched by the Govt on the 1st of this month. I have been checking out info, and it seems worth joining. You can contribute up to 8% of your earnings, with up to 4% employer match, plus an initial boost of $1000 from the govt, and tax credits of up to $1040. Slightly more complex than letting it grow tax free, which would be my preference, but nothing is perfect in this world. Of course it would be perfect if I ruled it!!!

There is a range of approved schemes you can choose from; I picked one up from my bank this morning, which offers 5 funds, from conservative (mainly fixed interest investments) to aggressive growth (nearly 100% shares). The management fees are reasonable, around 1% in total, and investors who itemise claims can get reimbursement. I already have some retirement savings in a private scheme which is a growth fund, but now I'm in -erm, "late youth" - maybe I should look at starting a balanced fund. You can get an age appropriate scheme which will transfer you based on your expected retirement date, but there is a transfer fee. Still got to consider whether saving that is penny wise, dollar foolish. Also, all I have heard so far seems to be based on someone working a regular job for a single employer. Don't know where that leaves self-employed, freelancers and temps - much of my past working life was spent on short term projects, which is why I had to be careful to put a portion of all I earned in a private scheme.

It amazes me how many people seem to be so resistant to putting anything into Kiwisaver. There seems to be a feeling of "this is just another ploy cooked up by the govt and the big money interests to rip us off." Well, maybe it's not so generous as people expected, but if you put nothing into it, then you'll find what you get from the govt at retirement isn't very generous either - and you will have ripped yourself off. It is mostly the lower earning people who argue this way, the higher earning people are quite keen to join, and if they object, it's becuase they have other ways of investing their money, or they project earlier retiremnt and don't want to tie up their savings until they're 65.

The other big argument, of course, is I can't afford it. I have 2 friends who smoke; one is earning a low income but is doing his level best to quit so he can save money. The other argues that the pleasure she gets from it is worth "only" $18 a week, and anyway she has a high earning husband who she's sure will look after their retirement. That $18 a week invested in Kiwisaver would come to around $100,000 by retirement. Meanwhile she continues to buy clothes and lunch out whenever she wants - then complains she "has" to work at a cr@p parttime job in order to support her family. Her lack of logic drives me crazy, but maybe I'm a smallminded person - was it Emerson who said consistency is a hobgoblin of little minds?

In the meantime I'll be a patriotic Kiwi - so glad our govt isn't telling us we should spend more for the good of the country.

House value

May 29th, 2007 at 08:15 pm

I got sent an email from a property valuers informing me that the average property value in my area now sells for over nz$260,000,- so if I'm thinking of buying or selling, please contact them.

Mmmm, on my local body taxes demand I'm still valued at nz$128,000 from 2 years ago. I'm happy with that, as I don't want my taxes going up any higher, but I'm thinking I ought to check the replacement value on my insurance.

I don't think my place will be worth anything like nz$260,000 tho - it's just a comfy little 2 bedroom with a nice view. There are a lot of apartment buildings and renovated big villas around which are going like hotcakes, so I think that's what's driving the average up. In any case, I don't really count my house value as part of my net worth or retirement savings. Yes it's nice to know I can tap into some equity if needed, but I still have to pay the loan back - so no plans for borrowing apart from necessary repairs.

Retirement savings

May 21st, 2007 at 05:31 pm

I got my annual statement today. Because I worked parttime, I was able to add $360, and the interest added came to a $1000. Smile - now have nz$19,180.

This is in a private scheme. If I can stave off starting a new job until Jul 1 I will be eligible to join the new Govt Kiwisaver scheme, with a $1000 bonus beginner deposit and contributions up to 4% of salary from employer. (No, this doesn't mean I'll turn down a good offer that comes my way if I have to start earlier.)

Happy memories

May 4th, 2007 at 01:59 pm

I haven't blogged for a while, i know. It's been a bit of a struggle lately, and I'm rather depressed about having so little money to live on. It's nice catching up with you guys, to know I'm not alone and see everybody working so hard toward their goals.

Today I had a job interview, which i think went well. The interviewer asked me one question - what was the achievement I was proudest of? I suppose I should have said something work related, but the first thing came to me: I'm really proud of the fact tho I had nothing after my relationship breakup, I managed to buy a house for myself and ds - and get it paid off in 15 years.

Well, he WAS impressed. He said, "that's amazing. I'm 55 and I'm scared I won't get my mortgage paid off before retirement." I didn't say I only had a little cottage, and he prob has a huge mansion, but I went home feeling much happier. I remember when I got the final letter from the bank, I threw a mortgage burning party. It felt like a great burden had been lifted off me to be debtfree.

Since then I've been drifting a bit I guess. I was so focused on that goal, i wasn't sure what to do next, and the idea of saving up 00s of 000s for my retiremnt seemed so enormous, it was hard see progress. But now I'm motivated to get started again. When you're a bit down it helps to remember past victories.

Old Age Cometh

November 13th, 2006 at 11:14 pm

so I am preparing. In New Zealand, everyone over 65 is currently guaranteed an income which is roughly equivalent to what I earn now ($nz260 a week). However, with the aging Baby Boomers, there are suggestions the retirement age will be increased or the amount may be cut. i would rather have less money now, while there is still a chance to earn and save more, than have less in my old age when I can't work to supplement my income and my health problems will be worse so bigger doctor's bills.

I redid my budget so I can put aside $20 a week into my retirement scheme. Hopefully that will be over $1000 a year. Alas it all comes out of after tax income; there are no rebates for those who don't have the good fortune to work for an employer who offers a retirement scheme. I don't think the govt wants to encourage us to save; it wants us to keep buying and pay the goods and services tax!
Of course you can bet the politicians made sure their own retirement scheme had a generous dollar-for-dollar subsidy out of the taxpayers' pockets. And when they're retired they carry on with all sorts of perks like free travel. I wonder how many disabled people could live on what a Member of Parliament costs the country.