Capital drawdown is a pretty tax-efficient form of income.
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Worrying trend in Australia.?
https://smallcaps.us14.list-manage.c...8&e=6c1ad5cc63
Depends on why they are in debt I suppose. In a world where cash is being trashed by reckless central banks why would you have savings instead of manageable debt on income producing assets.
You have a few properties Percy, are you telling me a big chunk of your wealth creation was not due to leverage.
If the debt is on credit cards for consumer spending or a mortgage for a bigger house then that would be worrying. Let them reap what they sow.
Interesting that Aussie super is means tested, if you don't need it you don't get it. They put 11% aside for retirement in NZ it is 3%.
I wonder if our potholes will get bigger while our social welfare and health bills get much larger as boomers retire or is nz national superannuation in its current form affordable as John Key and Jacinda Ardern assured us. I was going to compare NZ and Aussie spending on super as a percentage of the tax take to see who has the better policy.
One thing I can tell you Percy if things don't change re house prices then there will be a hell of a lot more Kiwis entering retirement with a mortgage in about 30 or 40 years. Young people will be buying later with larger loans.
Someone suggested this might be the first time a following generation will be worse off than the previous one, although technology might turn that around.
Continued growth in house prices exceeding growth in household incomes and growing inequality of wealth is not so good for the RV sector in its current form. Oldies owning multiple properties are unlikely to want more than one ORA for a unit. Whereas those who are priced out of home ownership are unlikely to be able to afford an ORA, unless they have accumulated substantial pension funds, which seems unlikely with Kiwisaver in its current form. At least the Australian pension scheme is more conducive and appealing for people to build up substantial balances.
Using debt to leverage assets with almost guaranteed capital gains, has become the bedrock of the Kiwi nest-egg building. So I am sure kiwis too would be comfortable with debt carrying into their senior years to be able to get an ever more expensive piece of the action.
This statement from Mary Holm reads: for every $100,000 you have saved, you can spend $100 a week. How accurate would you rate that statement? Is there a basis for her claim?
Here is her comment - https://maryholm.com/nz-herald-27-january-2024/
Probably working on the basis of returning circa 5% pa - whether interest, shares, other investments and paying lower tax rates when retired.
I note she says 'conservatively', and a simplistic calculation.
She's right though. $4m in the bank then hubby can retire!!
$5,200 equates to 5.2% pa. If the $100,000 is in term deposits and with current 6% interest rates at about 4.2% after about 30% tax, then your capital would only shrink by about $1000 pa. However the following year’s return would be smaller.
What are the assumptions with the inflation rate? Presumably Mary’s statement was set within the context of an article or response to a reader’s question?