How much capital do I need to retire comfortably on ?

[Beagle]

Just thought it might be a good idea to float this as a subject seeing as that's the reason many of us invest !!

I am sure many of us readily recall that famous line from the movie Wall Street when Bud Fox asked Gordon Geeko, How much is enough Gordon, How many Yachts can you waterski behind ?

So how much is enough ?

First up its clear everyone will have different idea's and different goals and aspirations regarding their lifestyle in retirement.
Secondly everyone will have different perspectives on when they want to retire and will have varying idea's about their likely lifespan when they retire.
Others will continue to enjoy working part time in their career or their business even after retirement.

There's also the open question of whether the Government will have sufficient funds to keep paying the superannuation when the huge tidal wave of baby boomers retire.
Will they bring back some sort of National Superannuation surtax like in the old days or is this such a huge political hot potato no party would dare take a position that would offend the grey tsunami ?
Will there be some sort of wealth or inheritance tax in the future ?

So how does one go about some sort of logical reasoning in terms of retirement planning ?

Lots of questions and I'd love to know others plans but for what its worth here's a starting point for consideration.

If one were to take the viewpoint that they'll work on until they're say 70 (at least part time) then how much capital should one have to live comfortably, (talking today's dollars) ?

Does one take the view that $1m should cut the mustard and with a well diversified portfolio of stocks and bonds earning an average return after tax of 7% should be possible, $70,000 per annum.
Add in national superannuation and some part time work or rent from a rental property or two and assuming your mortgage free on your house then all should be good right ?

Thoughts ?

[percy]

Most of us here are investors.
To start investing you first of all need to live within your means.
Only then can you start to invest,spare cash.
I do not think it makes a great deal of difference whether you invest in property,shares,art or whatever,so long as your do your research and are not greedy.
Therefore I think most of us on sharetrader will make sure we can live on our retirement income,whatever it turns out to be.
On the other hand, there a great number of people who can not live within their means.These people reach retirement age with either no house,or a house with a large mortgage.They can not afford to give up work.Life then becomes very hard for them.
So back to how much money do you need to retire on.Depending on where you live,your lifestyle,and health I would say someone living in the South Island with modest requirements could safely retire with a free hold house worth $350,000 and about $300,000 invested returning 5%.For a couple that would be $15,000 from investments plus super of approx. $25,000.
Move to Christchurch your house would most probably be approx. $500,000 and your investments would need to be worth approx. $600,000.
Move to Auckland,your house would most probably be worth $1,200,000 and you would need investments worth close to $2mil.
I am 66 and am still working.This has a huge influence on where you are.My work is the same as having approx. an extra $800,000 invested.I still love my work.

[Beagle]

The Mr Money Mustache blog goes into this question in great detail - http://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/

To summarise, its about 25 times the amount you spend to live comfortably, assuming a 4% withdrawal rate over time. The lower your consumer spending, the more you can save, the earlier you can retire. So if you can live on $40k per year then you need $1 mil.

Thanks KW and I'll enjoy having a good look through that ASAP. We have one of the highest yielding markets in the world whereas on the other hand a typical dividend yield on an American share might only be 2%. Do you think that's a material factor for N.Z. retirees ?


Most of us here are investors.
To start investing you first of all need to live within your means.
Only then can you start to invest,spare cash.
I do not think it makes a great deal of difference whether you invest in property,shares,art or whatever,so long as your do your research and are not greedy.
Therefore I think most of us on sharetrader will make sure we can live on our retirement income,whatever it turns out to be.
On the other hand, there a great number of people who can not live within their means.These people reach retirement age with either no house,or a house with a large mortgage.They can not afford to give up work.Life then becomes very hard for them.
So back to how much money do you need to retire on.Depending on where you live,your lifestyle,and health I would say someone living in the South Island with modest requirements could safely retire with a free hold house worth $350,000 and about $300,000 invested returning 5%.For a couple that would be $15,000 from investments plus super of approx. $25,000.
Move to Christchurch your house would most probably be approx. $500,000 and your investments would need to be worth approx. $600,000.
Move to Auckland,your house would most probably be worth $1,200,000 and you would need investments worth close to $2mil.
I am 66 and am still working.This has a huge influence on where you are.My work is the same as having approx. an extra $800,000 invested.I still love my work.

I think there will be a growing trend of retiring folk in Auckland cashing up their homes and moving to the provinces, (crossed my mind already but I'd get bored retiring early).
Can you please explain your thinking on why someone needs more invested capital to retire on in a major city ? Clearly their rates and insurance would be higher than in the provinces but all other costs about the same wouldn't you say ?

[axe]

Born in '85.

I do not expect that superannuation will exist or be a meaningful contribution by the time I get to retirement age.
Most stocks in my portfolio now are intended to be held until I retire and beyond. :)

[percy]

Thanks KW and I'll enjoy having a good look through that ASAP. We have one of the highest yielding markets in the world whereas on the other hand a typical dividend yield on an American share might only be 2%. Do you think that's a material factor for N.Z. retirees ?

I think there will be a growing trend of retiring folk in Auckland cashing up their homes and moving to the provinces, (crossed my mind already but I'd get bored retiring early).
Can you please explain your thinking on why someone needs more invested capital to retire on in a major city ? Clearly their rates and insurance would be higher than in the provinces but all other costs about the same wouldn't you say ?



Yes mainly rates and insurance.A property worth $150,000 less ,would mean $150,000 more for investment.

[Beagle]

I went to a retirement conference put on by the (as they were known at the time, New Zealand Society of Accountants). Was about 15 or thereabouts years ago and really freaked me out.
So called experts there reckoned you need $1.5m - $2.0m to retire comfortably on and had a raft of expert opinions and analysis to back it up.

Key Themes they espoused at that time included.
1. Despite a widely held belief by many older folks they are happy to trade down in their house when the time comes to retire, so as to free up capital, the evidence suggests most people are extremely reluctant to do so.
2. Best to plan on an average of 3 - 4% per annum after tax from a well diversified portfolio of low risk investments.
3. It is best to plan that National Superannuation in its current form won't exist when it comes time to retire.

When I have more time tomorrow I'll unpack why I believe all these three major theories are fundamentally flawed.

[Harvey Specter]

People off say you can downsize in retirement and your living costs reduce. That is fine while you are healthy and mobile, and then die suddenly.

With modern medicine though, you are more likely to live to a very old age, requiring lots of medical and home care assistance. So you need to ask yourself, not just what sort of active retirement do you want, but what sort of retirement do you want once you are no longer healthy and active.

My Grandparents decided they wanted to say in their own home. That's all well and good but 24/7 care costs $200k a year if you go through an agency and that doesn't include all your other costs. Sure that is the expensive way but what would a similar level of care cost in a nice retirement/care facility? $100k. And how long can you last in that condition - my grandmother was looking dodgy for a while but then they put a pacemaker in (at over the age of 90!) and now she will probably live till 100! 10 years x $200k = $2m - Ouch! and that is just from the age of 90. God knows how much they spent from 65 to 90 when they were still active enough for multiple overseas trips a year.

I'm aiming for $10m plus on the basis I dont lead a cheap life now so why would I want to in retirement. I'm quite a bit behind where I should be unfortunately.

[fungus pudding]

Most of us here are investors.
To start investing you first of all need to live within your means.
Only then can you start to invest,spare cash.
I do not think it makes a great deal of difference whether you invest in property,shares,art or whatever,so long as your do your research and are not greedy.
Therefore I think most of us on sharetrader will make sure we can live on our retirement income,whatever it turns out to be.
On the other hand, there a great number of people who can not live within their means.These people reach retirement age with either no house,or a house with a large mortgage.They can not afford to give up work.Life then becomes very hard for them.
So back to how much money do you need to retire on.Depending on where you live,your lifestyle,and health I would say someone living in the South Island with modest requirements could safely retire with a free hold house worth $350,000

Every now and then my pedantic nature takes over. So may I say almost all South Island houses are freehold. The term 'freehold' refers to tenure and essentially means the title is fee simple, or not leasehold. It's common street-talk for a property owned with no morgage, but it's incorrect and has no place in an investment forum. The correct term for a property not held under a mortgage is unencumbered, or simply mortgage-free. The majority of NZ homes are freehold, but are mortgaged.

[Joshuatree]

So right Harvey re medical costs and don't get me started on what specialists charge!. I want to be able to help family members occasionally with medical costs, education etc and donate to good causes .I'm thinking re $1.3-5 million plus a house is what i need.. I don't currently have a house, all funds in shares, fixed int and some cash atm.

[BIRMANBOY]

The size, quantity and variety of cheese usually spurs the avid treadmill devotee on to the necessary levels of effort. Keep up the good work:p
People off say you can downsize in retirement and your living costs reduce. That is fine while you are healthy and mobile, and then die suddenly.

With modern medicine though, you are more likely to live to a very old age, requiring lots of medical and home care assistance. So you need to ask yourself, not just what sort of active retirement do you want, but what sort of retirement do you want once you are no longer healthy and active.

My Grandparents decided they wanted to say in their own home. That's all well and good but 24/7 care costs $200k a year if you go through an agency and that doesn't include all your other costs. Sure that is the expensive way but what would a similar level of care cost in a nice retirement/care facility? $100k. And how long can you last in that condition - my grandmother was looking dodgy for a while but then they put a pacemaker in (at over the age of 90!) and now she will probably live till 100! 10 years x $200k = $2m - Ouch! and that is just from the age of 90. God knows how much they spent from 65 to 90 when they were still active enough for multiple overseas trips a year.

I'm aiming for $10m plus on the basis I dont lead a cheap life now so why would I want to in retirement. I'm quite a bit behind where I should be unfortunately.

[dingoNZ]

Most of us here are investors.
To start investing you first of all need to live within your means.
Only then can you start to invest,spare cash.
I do not think it makes a great deal of difference whether you invest in property,shares,art or whatever,so long as your do your research and are not greedy.
Therefore I think most of us on sharetrader will make sure we can live on our retirement income,whatever it turns out to be.
On the other hand, there a great number of people who can not live within their means.These people reach retirement age with either no house,or a house with a large mortgage.They can not afford to give up work.Life then becomes very hard for them.
So back to how much money do you need to retire on.Depending on where you live,your lifestyle,and health I would say someone living in the South Island with modest requirements could safely retire with a free hold house worth $350,000 and about $300,000 invested returning 5%.For a couple that would be $15,000 from investments plus super of approx. $25,000.
Move to Christchurch your house would most probably be approx. $500,000 and your investments would need to be worth approx. $600,000.
Move to Auckland,your house would most probably be worth $1,200,000 and you would need investments worth close to $2mil.
I am 66 and am still working.This has a huge influence on where you are.My work is the same as having approx. an extra $800,000 invested.I still love my work.

Agree with everything in this post, well written, Percy

[Aaron]

Income Required for Financial Freedom

Before Tax After Tax @33%
$70,000 $52,632


Capital Required at different rates of return
Yield% Capital Difference 1%


1% $7,000,000
2% $3,500,000 $3,500,000
3% $2,333,333 $1,166,667
4% $1,750,000 $583,333
5% $1,400,000 $350,000
6% $1,166,667 $233,333
7% $1,000,000 $166,667
8% $875,000 $125,000
9% $777,778 $97,222
10% $700,000 $77,778
11% $636,364 $63,636
12% $583,333 $53,030
13% $538,462 $44,872
14% $500,000 $38,462
15% $466,667 $33,333
16% $437,500 $29,167
17% $411,765 $25,735
18% $388,889 $22,876
19% $368,421 $20,468
20% $350,000 $18,421


Cutting and pasting from Excel creates presentation problems but I divide the $70k income by the interest rate to arrive at the required capital value. The last column shows the difference 1% improvement in yield makes in capital requirements. It highlights how important getting in excessive of 7% is. Even the difference in 4% to 5% is a jump.
In the current low interest rate environment of 3%-4% you will need over $2mill by my rough calculations. Hope I can pick up some 20% returns from somewhere. Based on past performance I will need to look after my health as I will need to be working well into retirement.

[Biscuit]

Income Required for Financial Freedom

Before Tax After Tax @33%
$70,000 $52,632




You also need capital appreciation to keep up with inflation. Otherwise, if you live for 30 years after retirement, your $70K won't go far at the end.

[Aaron]

You also need capital appreciation to keep up with inflation. Otherwise, if you live for 30 years after retirement, your $70K won't go far at the end.
That is even more depressing then. What if we have deflation instead. I have looked at my savings, compounding returns etc and it would be a dream to be financially free for me. If opportunities arise I can amplify my returns with debt but debt has its own risks.

Maybe debt isn't so risky in this new age of modern finance. I read that Germany was criticised for "a fixation that money should always be repaid". I guess in these days of high finance my thinking and Germanys thinking is old fashioned. If it is my money I am lending I funnily enough expect it to be repaid, with interest. How insane is the world of finance/debt/currency getting. Common sense says that if you lend money you expect to have it repaid. Unless I suppose you work for a bank and it is someone else's money then it might not be such a problem.
But more seriously though, this website has been reported for phishing threats. Did anyone else get this message when logging in.

[Biscuit]

That is even more depressing then. I have looked at my savings compounding returns and it would be a dream to be financially free for me. If opportunities arise you can amplify your returns with debt but debt has its own risks.
But more seriously though this website has been reported for phishing threats. Did anyone else get this message when logging in.

No, I did not get a phishing message. My personal goal was a mortgage-free lifestyle property plus a million invested. I've always lived on the smell of an oily rag, all my tenants have flasher cars than me and I've never owned an i-phone etc, am a slow adopter of expensive technology and if I ever retire, I'll be the old guy in rags at the back of the company meetings eating all the sandwiches.

[huxley]

You just need **** you money!

https://jlcollinsnh.wordpress.com/2011/06/06/why-you-need-f-you-money/

[Lizard]

Rethink your retirement. For me, "retiring early" was getting to stay home and bring up my kids and take all the holidays we wanted and then choose a new career. And never stressing about the possibility of us both being out of work. And being able to choose to retrain and take up a new career that suited me. This took a small, debt-free house and a starting sum of $30k (and currently needs about $300k with one modest part-time income and 3-4 teenagers).

After that, I am seriously keen to work out the rest of my life and never retire again :)

[kiora]

You just need **** you money!

https://jlcollinsnh.wordpress.com/2011/06/06/why-you-need-f-you-money/
Funny quote
I love it

[RGR367]

We cannot be really certain for sure, I guess. And it will be at the end of our lives when we get to know whether what we have saved or our capital was enough
or not. So just aspire to get as much above that very low threshold of $1M as per what KW shared on the link above and having passed all the conditions that are given (no debt, an unencumbered house, etc). If you're really an investor and have not started rather late $1M is easily attainable.

[Beagle]

We cannot be really certain for sure, I guess. And it will be at the end of our lives when we get to know whether what we have saved or our capital was enough
or not. So just aspire to get as much above that very low threshold of $1M as per what KW shared on the link above and having passed all the conditions that are given (no debt, an encumbered house, etc). If you're really an investor and have not started rather late $1M is easily attainable.

I agree and see that as a minimum target BUT here's another perspective from some retiree's I know well.

Mary has retired and lost her second husband to cancer many years ago. She lives in Turangi and is actively involved in the community and has very little in the way of retirement savings BUT she makes jams and pickles and knits colourful baby booties with pictures of cute farm animals on top which she sells at the fortnightly markets down there, often to tourists passing through. She makes about $300-400 per fortnight and she lives reasonably comfortably on that and her national super in her unencumbered home there which is basic and not worth much more than $100K but she seems happy enough.

Sylvia lost her husband a few years ago and lives on the National super plus a modest super policy her husband took out many years ago which pays for the monthly management fees, (about $550 a month) in the village she enjoys with a supportive and caring community. Her son manages a very small portfolio which pays her another $60 a week and she seems happy and well able to meet all her bills and travels down to see her extended family in Southland quite often.

Neil and Chris didn't have any money when they retired, in fact due to non existent retirement planning, excessive spending and some unfortunate events they still had a $200K mortgage on their modest Auckland family home. They love animals, (former manager of Animal welfare centre in Auckland), and didn't have enough room for their many different animal's and strays they took in at their home. They traded down to an nice unencumbered 8 acre property in Te Kuiti which cost around $250K from memory and run a full suite of chooks, pigs, sheep, goats e.t.c. as well as domestic animals they love including cats and dogs and seem very content. The bonus is they're close enough to Auckland and have room for their kids to come visit on the weekends and the kids seem to like having a break from Auckland.

Proof that you don't need an absolute fortune to retire on ?

Others I know have converted part of their house into a separate flat and rented it out and seem to be doing fine on one lot of rent plus the Supernanuation.

I wouldn't advocate aiming too low but I think we can all agree that human beings provided they're adaptable are capable of more than one way of skinning this retirement cat.

There's also the point that there's absolutely no guarantee whatsoever that you'll make it to say the age of 70 and even if you do its odds on favourite that you'll enjoy spending that XYZ amount of discretionary spend a lot more in your thirties, forties or fifties than you will in your nineties. Food for thought ? I think a balanced approach is best.

I've probably erred on the side of enjoying it as you go a little too much but you've got to call this thing as you see it.

[noodles]

I agree and see that as a minimum target BUT here's another perspective from some retiree's I know well.

Mary has retired and lost her second husband to cancer many years ago. She lives in Turangi and is actively involved in the community and has very little in the way of retirement savings BUT she makes jams and pickles and little colourful booties which she sells at the bi weekly markets down there, often to tourists passing through Turangi. She makes about $3-400 per fortnight and she lives reasonably comfortably on that and her national super in her unencumbered home there which is basic and not worth much more than $100K but she seems happy.

Sylvia lost her husband a few years ago and lives on the National super plus a modest super policy her husband took out many years ago which pays for the monthly management fees, (about $550 a month) in the village she enjoys with a supportive and caring community. Her son manages a very small portfolio which pays her another $60 a week and she seems happy and well able to meet all her bills and travels down to see her extended family in Southland quite often.

Neil and Chris didn't have any money when he retired, in fact due to poor planning and some unfortunate events they still had a $200K mortgage on their modest Auckland family home. He and Chris loved animals and didn;t have enough room for their many different animal's at their home. They traded down too an nice unencumbered 8 acre property in Te Kuiti and run a full suite of chooks, pigs, sheep, goats e.t.c. as well as domestic animals they love including cats and dogs and seem very happy. The bonus is they're close enough to Auckland and have room for their kids to come visit on the weekends and the kids seem to like having a break from Auckland.

Proof that you don't need an absolute fortune to retire on ?

Others I know have converted part of their house into a separate flat and rented it out and seem to be doing fine on one lot of rent plus the Supernanuation.

I wouldn't advocate aiming too low but I think we can all agree that human beings provided they're adaptable are capable of more than one way of skinning this retirement cat.
It troubles me that none of these cases have taken advantage of the Heartland Bank HER product. More advertising needed aye!

[Beagle]

It troubles me that none of these cases have taken advantage of the Heartland Bank HER product. More advertising needed aye!

I'm sure there's plenty of retired people sitting on unencumbered $1m plus houses in Auckland that would love to know more :)

[iceman]

It troubles me that none of these cases have taken advantage of the Heartland Bank HER product. More advertising needed aye!

Agree. This is not good. Lets fly them all to Christchurch , on Jetstar, to talk to Jeff face to face :p
Great discussion Roger, I have sought some advice on this recently and have come to the conclusion that a reasonable way to approach it for me is to work out how much I think I will need annually and aim to have that annual expenditure no more than about 4% of my retirement savings, assuming I will retire at 65-67YO.
But I share your problem of enjoying life too much at present and simply can't wait until I'm in my 70s or 80s to enjoy life. Relying on HNZ to eventually get me there :eek2:

[Harvey Specter]

Proof that you don't need an absolute fortune to retire on ?All well and good till you have to start paying for in home care (over and above the maximum provided by the state).

[Bjauck]

I'm sure there's plenty of retired people sitting on unencumbered $1m plus houses in Auckland that would love to know more :)
For many putting money into their home was their pension plan, HER will be a version of buying an annuity. It just mean the kids and grand-kids will be less likely to be able to buy a house, especially in Auckland, without their hoped-for inheritances.

[Bjauck]

All well and good till you have to start paying for in home care (over and above the maximum provided by the state).
Too true...what about if you have all assets in well-established family trust?

[Beagle]

Too true...what about if you have all assets in well-established family trust?

Yes couldn't agree more. If you're approaching anywhere near retirement age and your home isn't in a family trust already its time to get this matter sorted !!

[Harvey Specter]

Too true...what about if you have all assets in well-established family trust?
Expect full look through. But even if not, will you be happy to rely on the level of care the state provides, or will you want a higher one which you will have to pay for.

[Winston001]

I agree and see that as a minimum target BUT here's another perspective from some retiree's I know well.

Mary has retired and lost her second husband to cancer many years ago. She lives in Turangi and is actively involved in the community and has very little in the way of retirement savings BUT she makes jams and pickles and knits colourful baby booties with pictures of cute farm animals on top which she sells at the fortnightly markets down there, often to tourists passing through. She makes about $300-400 per fortnight and she lives reasonably comfortably on that and her national super in her unencumbered home there which is basic and not worth much more than $100K but she seems happy enough.

Sylvia lost her husband a few years ago and lives on the National super plus a modest super policy her husband took out many years ago which pays for the monthly management fees, (about $550 a month) in the village she enjoys with a supportive and caring community. Her son manages a very small portfolio which pays her another $60 a week and she seems happy and well able to meet all her bills and travels down to see her extended family in Southland quite often.

Neil and Chris didn't have any money when they retired, in fact due to non existent retirement planning, excessive spending and some unfortunate events they still had a $200K mortgage on their modest Auckland family home. They love animals, (former manager of Animal welfare centre in Auckland), and didn't have enough room for their many different animal's and strays they took in at their home. They traded down to an nice unencumbered 8 acre property in Te Kuiti which cost around $250K from memory and run a full suite of chooks, pigs, sheep, goats e.t.c. as well as domestic animals they love including cats and dogs and seem very content. The bonus is they're close enough to Auckland and have room for their kids to come visit on the weekends and the kids seem to like having a break from Auckland.

Proof that you don't need an absolute fortune to retire on ?

Others I know have converted part of their house into a separate flat and rented it out and seem to be doing fine on one lot of rent plus the Supernanuation.

I wouldn't advocate aiming too low but I think we can all agree that human beings provided they're adaptable are capable of more than one way of skinning this retirement cat.

There's also the point that there's absolutely no guarantee whatsoever that you'll make it to say the age of 70 and even if you do its odds on favourite that you'll enjoy spending that XYZ amount of discretionary spend a lot more in your thirties, forties or fifties than you will in your nineties. Food for thought ? I think a balanced approach is best.

I've probably erred on the side of enjoying it as you go a little too much but you've got to call this thing as you see it.

Very nicely illustrated Roger: my compliments.

I have spent years pondering the Great Wall of retirement and attended seminars, read books, and saved what I could.

I have also advised families and dealt with the parents estates when they have died.

My conclusion is that saving "enough" to provide a truly independent income is impossible for most people. Including myself. In fact I now regret not taking family holidays to Australia, Europe etc as my friends did.

We can't live life in the future: life is now. As in all things, moderation is the key. Save for retirement but don't let it worry you. Rich relationships with family and friends are the investment which brings rewards over your whole lifetime.

[Bjauck]

...
My conclusion is that saving "enough" to provide a truly independent income is impossible for most people. Including myself. In fact I now regret not taking family holidays to Australia, Europe etc as my friends did.

We can't live life in the future: life is now. As in all things, moderation is the key. Save for retirement but don't let it worry you. Rich relationships with family and friends are the investment which brings rewards over your whole lifetime.

My parents were frugal and have saved to the extent they had a good modest home with a moderate amount of investments. However one of them has a medical condition and now needs nursing home care. Because of their savings they exceed threshhold levels and they do not get a subsidy.

The comfortable retirement is in jeopardy, as an extra $50,000 pa is needed to cover fees. That would be equivalent to $75,000 before tax income! The costs of living for the independent parent has not reduced by much. There is a bit of regret, that they were not a bit more extravagant. Maybe they could have put in new kitchens and bathrooms and stayed in expensive hotels. Their investment savings will go down quickly with their extra expense. They pay for the nursing home (* all people are subsidised as to the medical component) , whilst some, if not the large majority of the fellow residents, do not. Is that fair? Does it encourage people to save for their retirement?

[huxley]

Pindar — 'O my soul, do not aspire to immortal life,but exhaust the limits of the possible.'

[Biscuit]

Pindar — 'O my soul, do not aspire to immortal life,but exhaust the limits of the possible.'

Nice quote. There is little point focusing your life on accumulating a swag of money to "retire" on. But it is worth doing the hard yards early on to gain a measure of independence. Whatever your measure of independence is. Set that as a goal and once you get there, your focus can change.

[artemis]

You just need **** you money! ...

Actually that is why I started investing in the first place. Had a good job but a bad boss, but was locked into the job. Solo parent, no child support, hefty mortgage. Decided never again, so made a financial plan where I could walk out the door if I chose to. Took quite a few years. Never needed to do it, but a huge relief to know I could.

[percy]

My parents were frugal and have saved to the extent they had a good modest home with a moderate amount of investments. However one of them has a medical condition and now needs nursing home care. Because of their savings they exceed threshhold levels and they do not get a subsidy.

The comfortable retirement is in jeopardy, as an extra $50,000 pa is needed to cover fees. That would be equivalent to $75,000 before tax income! The costs of living for the independent parent has not reduced by much. There is a bit of regret, that they were not a bit more extravagant. Maybe they could have put in new kitchens and bathrooms and stayed in expensive hotels. Their investment savings will go down quickly with their extra expense. They pay for the nursing home (* all people are subsidised as to the medical component) , whilst some, if not the large majority of the fellow residents, do not. Is that fair? Does it encourage people to save for their retirement?

Life unfortunately is never fair.
My wife's mother is in a nursing home with dementia.She worked as a machinist all her life.No family trust, means her house will have to be sold in the not too distant future, to pay for her care as her investment money is nearly gone.
We are now "comfortable " [well positioned] and the rainy day funds we have on deposit, which matures in May,are going to pay off the daughter's mortgage.The amount of interest, after tax, we have been receiving we can do without.

[Buffett Jr]

I'm 26. Currently earn around 40k after tax from employment. Of that, I save approximately half. So I could "survive" on 20k from investment income.

Using a very basic 4% return on investment, I would need 500k of capital invested.

However, even if I was super wealthy, I would continue to work in some way or form as I feel it is good for a variety of reasons. Sitting at home or on a beach has never interested me. I enjoy outdoors and things, but couldn't do it non stop. I like the social aspect of work too.

I keenly follow MMM (Mr Money Moustache) and think his website and forum is fantastic. I actually did an exercise after reading all 200+ odd of his blog posts and asked myself the question "If I had $10 million what would I do differently?" The only ONLY! thing I would change would be I'd do an overseas trip once a year and work 25-30 hours a week instead of 40-45. I wouldn't buy a new car, bigger house, boat, clothes, etc. I'm perfectly happy with the material possessions that I own and what I do in my spare time.

[RGR367]

I'm 26 .....................
"If I had $10 million what would I do differently?" The only ONLY! thing I would change would be I'd do an overseas trip once a year and work 25-30 hours a week instead of 40-45. I wouldn't buy a new car, bigger house, boat, clothes, etc. I'm perfectly happy with the material possessions that I own and what I do in my spare time.
With $10M and you'll just be doing overseas trip once a year and still work? Mate, that's really cutting it to the bone and no respect on what money can give you :ohmy:

[h2so4]

Life unfortunately is never fair.
My wife's mother is in a nursing home with dementia.She worked as a machinist all her life.No family trust, means her house will have to be sold in the not too distant future, to pay for her care as her investment money is nearly gone.
We are now "comfortable " [well positioned] and the rainy day funds we have on deposit, which matures in May,are going to pay off the daughter's mortgage.The amount of interest, after tax, we have been receiving we can do without.

My stars!, Percy always doing the right thing. 66 (Happy Birthday!!!) still 30 years of investing left to make another million or two. Ha!
I like lots of stuff on this thread particularly Rogers examples. I think there is lots of scaremongering going on about how much money we need to retire despite the fact that most of us will retire healthy and remain in our own homes.
Perhaps not having a retirement plan is a mistake but I am just not sure how you control the outcome of a fixed capital or income retirement goal.
I can only hope I can keep saving, minimise risk, and continue buying good companies and investments until that pay cheque stops.

[Baa_Baa]

... My wife's mother is in a nursing home with dementia.She worked as a machinist all her life.No family trust, means her house will have to be sold in the not too distant future, to pay for her care as her investment money is nearly gone. ...

percy, does your wife's mother not qualify for the residential care subsidy? Her house is not included in the assets test. http://www.workandincome.govt.nz/individuals/brochures/residential-care-subsidy.html

[percy]

percy, does your wife's mother not qualify for the residential care subsidy? Her house is not included in the assets test. http://www.workandincome.govt.nz/individuals/brochures/residential-care-subsidy.html

Thanks for the link.

[Lizard]

percy, does your wife's mother not qualify for the residential care subsidy? Her house is not included in the assets test. http://www.workandincome.govt.nz/individuals/brochures/residential-care-subsidy.html

I think you will find that if the person in care doesn't have a spouse living at the family home then the home is included in the total assets. The options are to then sell the home or apply for a residential care loan against the property.

[Bjauck]

Life unfortunately is never fair.
My wife's mother is in a nursing home with dementia.She worked as a machinist all her life.No family trust, means her house will have to be sold in the not too distant future, to pay for her care as her investment money is nearly gone.
We are now "comfortable " [well positioned] and the rainy day funds we have on deposit, which matures in May,are going to pay off the daughter's mortgage.The amount of interest, after tax, we have been receiving we can do without.
Life is not fair. However that is not a reason not to action over situations which we/government have a measure of influence and can try to make fairer. Also, when the government is trying to encourage people to save for their retirement, they could increase the incentives...

But then again, with many wealthy people who have their assets in long-established trusts, there have been few avenues for them to recoup long-term residential costs. Hence the increasingly tough trust "look-through" provisions in many areas, ranging from social welfare to matrimonial property (I think). Tougher look-throughs in a wide range of situations would tend to negate many benefits of trusts. It also raises the question as to why should family trusts enable some people to be able to circumvent government tax and social policy anyway? Trust law and retention of benefit from settled assets by the settlor needs to be examined, IMO. NZ has liberal trust laws which allow settlors to retain control over, use and benefit from assets settled on trust.

[barleeni]

Life is not fair. However that is not a reason not to action over situations which we/government have a measure of influence and can try to make fairer. Also, when the government is trying to encourage people to save for their retirement, they could increase the incentives...


Kiwisaver has some pretty damn good incentives.... I just checked my balance the other day. My personal contributions amount to $13,568.44 and yet my total balance amounts to $40,407. I would call that a very good incentive!

[Aaron]

It also raises the question as to why should family trusts enable some people to be able to circumvent government tax and social policy anyway? Trust law and retention of benefit from settled assets by the settlor needs to be examined, IMO. NZ has liberal trust laws which allow settlors to retain control over, use and benefit from assets settled on trust.
Why have discretionary family trusts at all. Companies are available to separate risky business ventures from the family home for the entrepreneur. Incorporated Societies would provide protection for people running charitable organisations. Why do we even need this extra layer of complication, especially as it has often been used to negate personal guarantees, receive government benefits when you might not have otherwise been entitled and also reduce tax and ACC premiums.
Yes all the benefits listed are great if you are receiving them but it makes society as a whole a bit un-fairer for no real benefit.

[Beagle]

Very nicely illustrated Roger: my compliments.

I have spent years pondering the Great Wall of retirement and attended seminars, read books, and saved what I could.

I have also advised families and dealt with the parents estates when they have died.

My conclusion is that saving "enough" to provide a truly independent income is impossible for most people. Including myself. In fact I now regret not taking family holidays to Australia, Europe etc as my friends did.

We can't live life in the future: life is now. As in all things, moderation is the key. Save for retirement but don't let it worry you. Rich relationships with family and friends are the investment which brings rewards over your whole lifetime.

Allow me to return the compliment, I really like the bit highlighted.
Some good posts here. Thanks for so many good contributions and its turned into quite an interesting thread.

I think we can all agree its a very good idea as an absolute minimum to have a debt free home by the time you retire. I also think its a good idea to have at the minimum some other asset that pays a regular income whether that's an investment portfolio, rental property, part of your existing home converted to a flat or some other reliable form of income as its a fairly modest lifestyle just existing on the national Superannuation alone even with a debt free home.

I'd like to take up the debate about Trusts.

Trust law is long established and I would perhaps somewhat boldly suggest most of our politicians have their family home in a family trust.
At present my understanding with rest home and in home care costs is they're looking back 10 years for gifting, used to be 5 AND they look through family trust structures in regard to regular income payments from same, I don't think they did this several years ago.

Now for some pure speculation.

Will that look back period increase or will they look through the family trust structure completely ?

I doubt there's the political will for the latter option but I could well be wrong but there's the distinct possibility that they'll look back further in an effort to stem the rising health care costs in this area.
In my view this underscores the importance of establishing your family trust early and getting the gifting done and dusted, (this process is helped by the recent abolition of gift duty so you can now gift it all in one step provided you're solvent and the Trust is too).

Will we see the re-introduction of some form of national superannuation surtax ?

In Australia I believe if an individual earns more than $72,000 they're ineligible for Super.
I suspect with the baby boomer population tsunami we'll see some sort of similar system here eventually and / or possibly an increase in the eligibility age from 65 ?
Whether this is in tandem with new look through trust provisions who could possibly know ? but I think it doesn't do your lifestyle any harm by having your assets in a family trust.

I'd rather not get into a social debate about whether its morally right that some sectors of the population gain an advantage through trusts, (real can of worms that one). I'd prefer to examine how the law works today and suggest some possible extrapolations based on logic and trends.

[Harvey Specter]

Aaron - a trust is easier than a prenup. Other than that, I am coming around to the line of thinking that they ain't worth it. However, the fact banks require a personal guarantee for pretty much everything which means the benefit of a limited liability company is diminished (for secured/band creditors anyway).

There are now pretty comprehensive look through re working for families do I expect this to be rolled out for all govt benefits.

[Beagle]

Aaron - a trust is easier than a prenup. Other than that, I am coming around to the line of thinking that they ain't worth it. However, the fact banks require a personal guarantee for pretty much everything which means the benefit of a limited liability company is diminished (for secured/band creditors anyway).

There are now pretty comprehensive look through re working for families do I expect this to be rolled out for all govt benefits.

Wouldn't surprise me either. Worth noting that at present there's a distinct difference between regular weekly / monthly / quarterly income and one off provision of benefits. For example the trust buys a new car and makes that available to the discretionary beneficiary the trustee's choose. Trust feels its appropriate for the health and wellbeing of that elderly beneficiary to have a holiday on some warm beach overseas because N.Z.'s harsh winter plays havoc with joints and arthritis...e.t.c.

[Bjauck]

Why have discretionary family trusts at all. Companies are available to separate risky business ventures from the family home for the entrepreneur. Incorporated Societies would provide protection for people running charitable organisations. Why do we even need this extra layer of complication, especially as it has often been used to negate personal guarantees, receive government benefits when you might not have otherwise been entitled and also reduce tax and ACC premiums.
Yes all the benefits listed are great if you are receiving them but it makes society as a whole a bit un-fairer for no real benefit.
I agree. I think the liberal trust laws have helped protect the assets of a politically influential segment of society. As most MPs have a lot of their wealth in such trusts, I doubt there will be meaningful reform emanating from parliament any time soon.

I think NZ trust law is liberal, and hence trusts more popular than in other common law countries, because a major consideration in NZ had been to provide a structure to help keep intact large farms. The break-up of large stations is/was seen as being an uneconomic move - at least by certain influential lobby groups. A farm in a long-established trust is (legally) no longer part of the settlor's property and is therefore not affected by the settlor's bankruptcy or death, for example.

On the other hand an individual's shareholding in a company would be subject to the normal claims on bankruptcy and death. So, a large sheep station held in a company structure, for example, would be more likely to be sub-divided than if it were under a continuing trust.

[Bjauck]

...
Trust law is long established and I would perhaps somewhat boldly suggest most of our politicians have their family home in a family trust.
At present my understanding with rest home and in home care costs is they're looking back 10 years for gifting, used to be 5 AND they look through family trust structures in regard to regular income payments from same, I don't think they did this several years ago....
Many trusts are set up when people are in their middle-age. When they reach the age when they are likely (on average) to need nursing or rest home care they will be 75 plus. It could easily be some 25 years after they may have put their assets into a trust. For all intents and purposes they have been the de facto owners of the assets in the intervening period, but de jure not the legal owners. IMO If the settlor is applying for a government benefit and has settled assets at any time on a trust in which he/she is a beneficiary and/or a trustee, the look back should have no limit.

The widespread use of trusts as shelters for assets has tied the government's hands as far as reintroducing death duties or inheritance tax, as so many of those people who would otherwise have large estates, have put their assets in trusts. The only option may be to introduce an effective superannuation means test/surcharge. As long as it also takes into account any benefit derived from trust assets and/or income.

[skid]

Allow me to return the compliment, I really like the bit highlighted.
Some good posts here. Thanks for so many good contributions and its turned into quite an interesting thread.

I think we can all agree its a very good idea as an absolute minimum to have a debt free home by the time you retire. I also think its a good idea to have at the minimum some other asset that pays a regular income whether that's an investment portfolio, rental property, part of your existing home converted to a flat or some other reliable form of income as its a fairly modest lifestyle just existing on the national Superannuation alone even with a debt free home.

I'd like to take up the debate about Trusts.

Trust law is long established and I would perhaps somewhat boldly suggest most of our politicians have their family home in a family trust.
At present my understanding with rest home and in home care costs is they're looking back 10 years for gifting, used to be 5 AND they look through family trust structures in regard to regular income payments from same, I don't think they did this several years ago.

Now for some pure speculation.

Will that look back period increase or will they look through the family trust structure completely ?

I doubt there's the political will for the latter option but I could well be wrong but there's the distinct possibility that they'll look back further in an effort to stem the rising health care costs in this area.
In my view this underscores the importance of establishing your family trust early and getting the gifting done and dusted, (this process is helped by the recent abolition of gift duty so you can now gift it all in one step provided you're solvent and the Trust is too).

Will we see the re-introduction of some form of national superannuation surtax ?

In Australia I believe if an individual earns more than $72,000 they're ineligible for Super.
I suspect with the baby boomer population tsunami we'll see some sort of similar system here eventually and / or possibly an increase in the eligibility age from 65 ?
Whether this is in tandem with new look through trust provisions who could possibly know ? but I think it doesn't do your lifestyle any harm by having your assets in a family trust.

I'd rather not get into a social debate about whether its morally right that some sectors of the population gain an advantage through trusts, (real can of worms that one). I'd prefer to examine how the law works today and suggest some possible extrapolations based on logic and trends.

From what I have heard the gifting has to continue as before in order to be eligible for old folks home care--i believe that the gov. will look at the ''gifting all in one step'' as one payment ,meaning all the rest is considered ungifted. Its a bit of a double standard in terms of who is interpreting and for what.--(correct me if Im wrong)

[Aaron]

I'd rather not get into a social debate about whether its morally right that some sectors of the population gain an advantage through trusts, (real can of worms that one). I'd prefer to examine how the law works today and suggest some possible extrapolations based on logic and trends.
Sorry for going off thread. I agree though no point debating what is morally or intellectually right.
Trusts are bulls**t but you might as well use them if they are an option that will help benefit you. I think it is up to the leaders of the country to change this and I don't think there is any political will to do so.

[Bjauck]

Kiwisaver has some pretty damn good incentives.... I just checked my balance the other day. My personal contributions amount to $13,568.44 and yet my total balance amounts to $40,407. I would call that a very good incentive!
Kiwisaver has weak incentives compared with overseas schemes, especially when your balance gets higher.

That notwithstanding, how would you feel that you had spent your working life being conscientious with Kiwisaver; being careful with your spending so that you can make payments to Kiwisaver. Your neighbour however opted out of Kiwisaver. Decades later you meet up in a nursing home. You have to pay for your accommodation but the government pays for your neighbour. Your neighbour talks to you about his luxury cruises and cordon bleu restaurants whilst you tell him about how you enjoyed your spare time darning your socks!

[macduffy]

Right on all counts, Aaron!

[Aaron]

That notwithstanding, how would you feel that you had spent your working life being conscientious with Kiwisaver; being careful with your spending so that you can make payments to Kiwisaver. Your neighbour however opted out of Kiwisaver. Decades later you meet up in a nursing home. You have to pay for your accommodation but the government pays for your neighbour. Your neighbour talks to you about his luxury cruises and cordon bleu restaurants whilst you tell him about how you enjoyed your spare time darning your socks!
Sorry still off thread but it will probably burn my britches after saving all my life foregoing travel and other fun to save only to have to use my savings to pay for my health care while the guy who has lived life to the full gets everyone else(taxpayers) to take care of his costs. Even worse if his wealth is in trust and his kids inheritance is saved at the expense of the NZ taxpayer. Although I don't think the amount of welfare benefits and living off the taxpayer is a life of luxury for someone with no savings. We did discuss all this before the last general election didn't we?

We had a general election and clear majority of NZers voted for what they thought was best for them (and maybe NZ and society as a whole).
Prior to the election I read a "thought leadership paper" (horrible term) from NZIER they came up with1/raising the retirement age, 2/capital gains tax, 3/compulsory superannuation saving. All policies adopted by Labour but all that achieved was to see Labour poll terribly. Hopefully next election we won’t be debating which party leader is the nicer guy but which party has the best policies for NZ’s future. Although I did enjoy seeing my MRP shares take off after the election.
Anyway as much as I dislike compulsion to do anything if Kiwisaver became compulsory you wouldn't have the problem that Bjauck just mentioned above. Don't go on about "it is up to the individual". I would probably drive faster than current speed limits and maybe without a seat belt on, or ride without a helmet, without compulsion. I don't fight it because it makes sense even though I don't like it. The idea of compulsory Kiwisaver is not nice but there are lots of us less intelligent people who sometimes need to be pushed to do the sensible thing.

[Bjauck]

Sorry still off thread but it will probably burn my britches after saving all my life foregoing travel...The idea of compulsory Kiwisaver is not nice but there are lots of us less intelligent people who sometimes need to be pushed to do the sensible thing.
That is right on the point I would think. What you posted affects how much capital is needed to comfortably retire on. If someone has no or few savings for retirement (even if by deliberately impoverishing themselves through a trust, scheme or by profligate spending) then the rest of us will end up paying more in some way, reducing our own ability to have a comfortable retirement.

[Winston001]

Oh golly, where to start.

Ok, a reality check. The average person (most Kiwis) never earn a high income in their lives so they don't have money to hide in trusts or under the mattress. Some of those people are talked into forming Family Trusts by their children with an eagle eye on inheritance. But all they have is a house - no millions stacked away, no yachts, no Gold Coast hideaway.

Yes - there are wealthy Kiwis who do take advantage of trust structures to hide assets and gain tax advantages, although at 33% trustee tax that's not so clever.

I have created many trusts for people in all manner of circumstances and have also talked other people out of it. One size does not fit all. My own parents do not have trusts and yes, Dad paid for his rest home care until he passed. It was a matter of dignity and independence.

[Aaron]

Oh golly, where to start.

Ok, a reality check. The average person (most Kiwis) never earn a high income in their lives so they don't have money to hide in trusts or under the mattress. Some of those people are talked into forming Family Trusts by their children with an eagle eye on inheritance. But all they have is a house - no millions stacked away, no yachts, no Gold Coast hideaway.

Yes - there are wealthy Kiwis who do take advantage of trust structures to hide assets and gain tax advantages, although at 33% trustee tax that's not so clever.

I have created many trusts for people in all manner of circumstances and have also talked other people out of it. One size does not fit all. My own parents do not have trusts and yes, Dad paid for his rest home care until he passed. It was a matter of dignity and independence.
Agreed Trusts are only useful if you have significant wealth which most of us don't. If you are wealthy you are probably already on the top 33% tax rate anyway. The trust will allow you to distribute income to beneficiaries who are on a lower tax rate. For example kids at University (over 16yrs). What is the benefit for society of giving that opportunity to someone already well off.

[winner69]

I hope that you guys are not thinking of cutting National Super.

Mine starts this week ..... A bit of extra cash for things like oysters and chips on the beach and other treats.

I don't really need it but it will be good to spend. After it is rightfully mine as the government has been putting a bit aside for years. My Dad said 'one and frippence of your tax pound goes towards your retirement son'. The JP who witnessed my application said 'no your Dad was wrong, it was one and sixpence'

That National Super is rightfully mine. I will selfishly accept it (taxable bugger it) with glee. So no talk of taking it away. It is up to you young uns to work out how to pay for it

[Beagle]

Agreed Trusts are only useful if you have significant wealth which most of us don't. If you are wealthy you are probably already on the top 33% tax rate anyway. The trust will allow you to distribute income to beneficiaries who are on a lower tax rate. For example kids at University (over 16yrs). What is the benefit for society of giving that opportunity to someone already well off.

Like I said, Trusts are a "can of worms" and will garner debate from a moral and ethical perspective so with all due respect to those of you who have already vented their spleen and other contemplating doing so, perhaps that's best left to its own thread that you are most welcome to start.

Granted these two topics are linked but perhaps now.... we can get back to the main thread topic.

[BIRMANBOY]

Happy birthday W69...it does come in handy. I'm sure you have worked hard your entire life as a vast majority of us have. It would be extremely difficult to live well off super alone but it is gratefully accepted. It would be political suicide to take it away so undoubtedly will be tinkered with over time to reduce the impact the growing number of retirees will have on fiscal balance.
I hope that you guys are not thinking of cutting National Super.

Mine starts this week ..... A bit of extra cash for things like oysters and chips on the beach and other treats.

I don't really need it but it will be good to spend. After it is rightfully mine as the government has been putting a bit aside for years. My Dad said 'one and frippence of your tax pound goes towards your retirement son'. The JP who witnessed my application said 'no your Dad was wrong, it was one and sixpence'

That National Super is rightfully mine. I will selfishly accept it (taxable bugger it) with glee. So no talk of taking it away. It is up to you young uns to work out how to pay for it

[Harvey Specter]

After it is rightfully mine as the government has been putting a bit aside for years. They have not!

Even the 'cullen' fund is no where near fully funding retirement for the years it will be drawn down in.

However, tax rates have been (in theory) based on you receiving it so you are rightfully entitled to it.

[Bjauck]

I hope that you guys are not thinking of cutting National Super.

Mine starts this week ..... A bit of extra cash for things like oysters and chips on the beach and other treats.

I don't really need it but it will be good to spend. After it is rightfully mine as the government has been putting a bit aside for years. My Dad said 'one and frippence of your tax pound goes towards your retirement son'. The JP who witnessed my application said 'no your Dad was wrong, it was one and sixpence'

That National Super is rightfully mine. I will selfishly accept it (taxable bugger it) with glee. So no talk of taking it away. It is up to you young uns to work out how to pay for it
Congrats to W69 for reaching the Golden Years with money in his back pocket! Your post reminds of when I was in England and visited Blackpool beach on a midsummer day. There was a long row of deck chairs each with a dour senior in winter clothes with a newspaper wrapped bundle of chips. It reminds me of the reputed last words of King George V "Bug**r Bognor". Take your super and run, for it may be the end of the Golden Weather. Gen X may not be so lucky.

[Aaron]

Like I said, Trusts are a "can of worms" and will garner debate from a moral and ethical perspective so with all due respect to those of you who have already vented their spleen and other contemplating doing so, perhaps that's best left to its own thread that you are most welcome to start.

Granted these two topics are linked but perhaps now.... we can get back to the main thread topic.
Fair enough Roger.
Now how much income do you need to retire comfortably? W69 says he doesn't really need his national super (happy birthday by the way). Why would the govt (we the people of NZ) pay welfare to someone who doesn't need it (absolutely crazy). Nothing personal W69 I just don’t think welfare should be paid to anyone who doesn’t need it.
The govt hasn't been putting anything aside for years. It did for a while but I think it was spent on "Think Big". Michael Cullen had a wee go at it with the Cullen Fund. Here is a link to our Balance Sheet as at 30/06/2014. Which line is the one showing the money put aside and invested for National Super.
http://www.treasury.govt.nz/government/financialstatements/yearend/jun14/19.htm
I see the deficit was $2,933,000,000 ($56mill a week) Better check that as even I find it hard to believe.
Before anyone bangs on about other beneficiaries such as solo mums please check “Note 6: Transfer Payments and Subsidies” looks to me like half of social welfare spend is NZ Super at $10,913mill with sole parent support at $1,222. Family Assistance at $1,965 is the next biggest.

Anyway stop winding me up you old b***tards I have to focus on work as I need to save enough for retirement as time is running out.

[Harvey Specter]

Aaron - Super is an entitlement, not a benefit. Just like free(ish) education and hospital care for all NZ citizens, no matter how wealthy you are.

[Biscuit]

Aaron - Super is an entitlement, not a benefit. Just like free(ish) education and hospital care for all NZ citizens, no matter how wealthy you are.

According to the wikipaedia:

An entitlement is a government program guaranteeing access to some benefit by members of a specific group and based on established rights (http://en.wikipedia.org/wiki/Constitutional_right) or by legislation (http://en.wikipedia.org/wiki/Legislation).[1] (http://en.wikipedia.org/wiki/Entitlement#cite_note-1)[2] (http://en.wikipedia.org/wiki/Entitlement#cite_note-2) The term may also reflect a pejorative connotation, as in a "sense of entitlement". A "right" is itself an entitlement associated with a moral or social principle (http://en.wikipedia.org/wiki/Principle), such that an "entitlement" is a provision (http://en.wikipedia.org/wiki/Provision) made in accordance with a legal framework (http://en.wikipedia.org/wiki/Law) of a society. Typically, entitlements are based on concepts of principle (http://en.wikipedia.org/wiki/Principle) ("rights") which are themselves based in concepts of social equality (http://en.wikipedia.org/wiki/Social_equality) or enfranchisement (http://en.wikipedia.org/wiki/Enfranchisement).

W69 might have a sense of entitlement but then so do many other beneficiaries

[huxley]

That doesn't excuse it from scrutiny...

[Aaron]

Aaron - Super is an entitlement, not a benefit. Just like free(ish) education and hospital care for all NZ citizens, no matter how wealthy you are.
The money raised from the people of NZ will be spent how our elected leaders decide and our vote is our chance to have a say in that decision.

Tertiary education used to be a "right not a privilege"(or an entitlement if you will) but if I recall correctly in 1992 student fees came in and have been increasing ever since. Now do the maths if the last boomer was born in around 1964 add say 28 years and you will see that tertiary education became unaffordable about the same time as last baby boomer graduated.

I just think that the people of NZ's money should go to help those who need it. Based on history I am guessing national super will become unaffordable sometime around 2029. (1964+65)

P.s. sorry to be off topic again. In a way the national super debate is an important one for many NZers as they may be relying on it if they haven't accumulated enough capital. Will try to keep political discussions on the right thread.

[huxley]

the younger crew on here may be interested in this :
http://www.radionz.co.nz/national/programmes/sunday/audio/201752008/andrew-dean-debts-and-legacies

[Aaron]

the younger crew on here may be interested in this :
http://www.radionz.co.nz/national/programmes/sunday/audio/201752008/andrew-dean-debts-and-legacies
Thanks Huxley also a quick summary here
http://www.stuff.co.nz/business/money/67973985/young-new-zealanders-get-a-voice-in-ruth-roger-and-me
At least he has a minimum savings target of $620,000 and plenty of time to save in case NZ Super is actually unaffordable.
Young people should stop feeling sorry for themselves and take an interest in their country and the people and policies we elect to represent us and shape society. Whinging isn't an option doing something about it is. Labour had two policies to address the affordability of national super. Raising the age of retirement and compulsory retirement saving. They also proposed a capital gains tax (weakened by own home exemptions(bad idea)but necessary to ensure at least a couple of votes) to spread the tax base. Possibly even making it fairer. These are unpopular for the individual but might have been good for NZ as a whole. Labour got slaughtered at election time and we will get the society we voted for in the long run.

[artemis]

Mr English has said no to a CGT but that the Budget will put more dosh into IRD compliance.

Which has a good return if past experience is anything to go by (Hansard last month):

Hon JO GOODHEW: Last Budget this Government actually provided an extra $132 million to Inland Revenue to bolster its tax compliance activities, and, boy, has that been good value for money. Targeting the hidden economy, tax avoidance initiatives returned nearly $50 million—$5.51 for every dollar spent. Targeting property speculators returned $52 million, a return of $7.88 for every $1 invested.

[winner69]

The Social Security Act 1938 - a Social Security Tax of one shilling and sixpence in the pound is introduced to fund both social security benefits and health costs but is later merged into standard income tax rates.

That was the promise.


National Superannuation, as introduced in 1976, was seen as an inter-generational social contract. Each generation in retirement would be funded by their childrens' contributions, not by their own. The rationale being that the way to secure a prosperous retirement was to invest in our generation of children, rather than being 'encouraged' to save more

That was the new contract

I have invested in my own children and their friends (and society in general) to ensure they have a prosperous nation to give me a 'prosperous retirement'. Just hope they see the light of day and don't shirk their responsibilities.

Sorry for hijacking your thread Roger. To answer your original question - BLOODY HEAPS but don't dare tamper with my National Super. If you don't achieve BLOODY HEAPS I'm sure you will still enjoy a fulfilling and happy life with your family and friends.

[Harvey Specter]

I just think that the people of NZ's money should go to help those who need it. Based on history I am guessing national super will become unaffordable sometime around 2029. (1964+65)I agree. I think super should be means tested with full trust look through.

But that needs to be phased in, along with an increase in the age of entitlement.

This is need so that the young (under 40?) can plan knowing they only will get it in certain situations. The effect of that change should also be a change in the taxation of super funds, either a lower tax rate or EET regime (rather that TTE).

Unfortunately, by the time Key is rolled (he has said not under his watch), Labour will probably have a leader opposed to an increase and means testing. This issue needs a cross party accord.

So back to the original question, that is why I think I need more than what the rest of you are saying. Because I think I wont be receiving national super, but I think I will still be paying taxes at the rate that assumes I am - the worst of both worlds. Anything left over will ensure my family are educated and the world made a better place. Hope for the best, plan for the worst.

[Aaron]

Sorry for hijacking your thread Roger. To answer your original question - BLOODY HEAPS but don't dare tamper with my National Super. If you don't achieve BLOODY HEAPS I'm sure you will still enjoy a fulfilling and happy life with your family and friends.
Thanks for a conclusive answer W69 I was thinking the answer was s**t loads but bloody heaps sounds like a better less vulgar target.

[macduffy]

I have discovered that you need $164k a year to live comfortably in retirement on, so $4.1 million :-)

No need for a rest home when you have a crew of 3,000 people to look after you.
http://www.wftv.com/news/news/weird-news/86-year-old-woman-lives-full-time-luxury-cruise-sh/njrYm/

It's only $4.1m if, at 86, one either intends to live forever or to leave the $4.1m intact for others!

The real answer to the question is, of course, "it depends".

;)

[Beagle]

Sorry for hijacking your thread Roger. To answer your original question - BLOODY HEAPS but don't dare tamper with my National Super. If you don't achieve BLOODY HEAPS I'm sure you will still enjoy a fulfilling and happy life with your family and friends.

Its such a conundrum this thing. Unfortunately your answer is a little vague :)
Having raised two girls, one with many problems I've alluded too in this forum before, I'm not absolutely certain I'll make it from 53 to 70, (I am pre-supposing that in the absence of a cross party accord the Government will have no alternative but to dramatically delay the eligibility date at some stage soon to avoid the boomer tsunami as long as possible).

The biggest wave hits in 11 years (2026) as more people, (more than 50,000 born in 1961, more than any other year ever in N.Z. including John Key and myself)...not sure I want to mention him at the minute with ponytail-gate and all..anyway I digress. Pretty sure we'll follow Germany and other countries raising the eligibility age to the late 60's, I think Germany are already 67.

Some sort of re-introduction of national super surtax is probably logical, who knows if there will be some new Trust look-through provisions or not, I doubt it but how to be sure, quite obviously one can't be.

To be honest this **** used to really worry me but now I take a view that one should enjoy life as much as reasonably possible along the way, try to stay fit and healthy, make prudent and rational investment decisions, spend money on large capex items carefully and with moderation and much forethought and be adaptable to whatever outcome comes about if and when you reach retirement.

I have high blood pressure already...worrying about retirement planning doesn't help.

[BIRMANBOY]

Not too frazzle your nerves any further but WHO says for NZ the average life expectancy in 2012 is 82 and from 1990 to to 2012 was roughly 3 years gain every 10 year period. So extrapolating that out if you are retiring in 2022 or thereabouts the life expectancy will be 85. However with medical and genome research accelerating I would guess that it could actually be 90 or over. Failing that you could move to Chad where the life expectancy this year is 49.44 years.

[winner69]

I get the impression we think 10 to 20 years will be just an extrapolation of where we are today.

Imagine if the world realised continued growth and ridiculous levels of debt was unsustainable and that the greedy and morally corrupt corporates, moneymen and politicians had to brought to account.

Turmoil would exist for a while but the result would be a more decent, less materalistic and caring world. On that may see things based more on local communities working together and looking after each other. We may see more families living together with granddad and grandma being looked after in the big family home (good god there's enough big houses already that are under utilised). Even better no more big box Bunnings stores and supermarkets - it's off to the local hardware store and the local friendly butcher.

In that world BLOODY HEAPS of savings might not be needed. We can live happily ever after in a decent and caring society.

A study of social and generational trends and how they have cycled over the many centuries is an interesting topic.

[BIRMANBOY]

Have you been at the catnip again W? Are you hanging out for a monstrous solar flare to move us back into the 1950"s?:cool:
I get the impression we think 10 to 20 years will be just an extrapolation of where we are today.

Imagine if the world realised continued growth and ridiculous levels of debt was unsustainable and that the greedy and morally corrupt corporates, moneymen and politicians had to brought to account.

Turmoil would exist for a while but the result would be a more decent, less materalistic and caring world. On that may see things based more on local communities working together and looking after each other. We may see more families living together with granddad and grandma being looked after in the big family home (good god there's enough big houses already that are under utilised). Even better no more big box Bunnings stores and supermarkets - it's off to the local hardware store and the local friendly butcher.

In that world BLOODY HEAPS of savings might not be needed. We can live happily ever after in a decent and caring society.

A study of social and generational trends and how they have cycled over the many centuries is an interesting topic.

[Beagle]

I get the impression we think 10 to 20 years will be just an extrapolation of where we are today.

Imagine if the world realised continued growth and ridiculous levels of debt was unsustainable and that the greedy and morally corrupt corporates, moneymen and politicians had to brought to account.

Turmoil would exist for a while but the result would be a more decent, less materalistic and caring world. On that may see things based more on local communities working together and looking after each other. We may see more families living together with granddad and grandma being looked after in the big family home (good god there's enough big houses already that are under utilised). Even better no more big box Bunnings stores and supermarkets - it's off to the local hardware store and the local friendly butcher.

In that world BLOODY HEAPS of savings might not be needed. We can live happily ever after in a decent and caring society.

A study of social and generational trends and how they have cycled over the many centuries is an interesting topic.

A nice dream mate. Hold on to that one, you never know....there's always a chance it might happen :)

[percy]

Sorry I could not bear to turn back the clock.
Huge ques at the Post Office.
No service stations open during the weekend.
Sandwichs at Akaroa on a Sunday were made on the Friday,if you were lucky..!
Muldoon in full swing.
Priests raping the choir boys.
Charities's overheads eating up all funds raised.
Waiting for approval to take funds out on NZ for a holiday.
Stinking kerosene heaters.
And British cars that broke down all the time.[Morris Minors exempted]
Waiting lists for years for a new car.
Import licensing meant over priced goods.
Pubs closing at 6pm.
Today is the best of times,and I expect tomorrow to be even better.!

[winner69]

Sorry I could not bear to turn back the clock.
Huge ques at the Post Office.
No service stations open during the weekend.
Sandwichs at Akaroa on a Sunday were made on the Friday,if you were lucky..!
Muldoon in full swing.
Priests raping the choir boys.
Charities's overheads eating up all funds raised.
Waiting for approval to take funds out on NZ for a holiday.
Stinking kerosene heaters.
And British cars that broke down all the time.[Morris Minors exempted]
Waiting lists for years for a new car.
Import licensing meant over priced goods.
Pubs closing at 6pm.
Today is the best of times,and I expect tomorrow to be even better.!

You and Birman deserve each other, for not listening properly and jumping to conclusions

Utopia will be better than today. All the good things remain and get better but we won't have all that greed and other stuff we have now.

And the sandwiches at Akaroa will be freshly made with local produce by a lovely person enjoying the great new world. Maybe a salmon and avocado one ....sounds um

[percy]

You and Birman deserve each other, for not listening properly and jumping to conclusions

Utopia will be better than today. All the good things remain and get better but we won't have all that greed and other stuff we have now.

And the sandwiches at Akaroa will be freshly made with local produce by a lovely person enjoying the great new world. Maybe a salmon and avocado one ....sounds um

No need to get nasty and threaten me with a life of purgatory with Birman!!!![Although it may be better than a life with the daughters,and their partners and offspring]!!!!
Utopia..I know you and I try to be better people,life better lives,and improve our outlook to others,but unfortunately we will never change human nature. Fear,greed,honesty,dishonesty,good,bad is the way people are.It appears to be the same with all races.Diversity does not equal Utopia.!
And from google; Akaroa village is home to a great bunch of imaginative chiefs! Sounds like utopia to me.
Do you remember carless days,and think big?

[percy]

I watched Mad Men - everyone was drunk, all the time. And they smoked like they had not a care in the world LOL

One of my jobs at the local Ford dealer when I first left school, was doing the weekly cigarette order for staff.Most ordered a carton of their favourite brand.The Rothams rep was a well known local sportsman.A lot of money up in smoke.Yes, nearly everyone smoked.
Friday night was fun.Finished work at 5pm and drunk by 6pm when the pubs closed.Think there was more beer on the floor than on the tables.!
Madness.!
Even madder was when I worked at Bass Charrington Brewery in The Mile End Road, London.
Free beer for staff.A stubbie [or two] for morning tea!!! The old timers went to the pub over the road at lunch time for spirit chasers!!!!!

[fungus pudding]

Sorry I could not bear to turn back the clock.
Huge ques at the Post Office.
No service stations open during the weekend.
Sandwichs at Akaroa on a Sunday were made on the Friday,if you were lucky..!
Muldoon in full swing.
Priests raping the choir boys.
Charities's overheads eating up all funds raised.
Waiting for approval to take funds out on NZ for a holiday.
Stinking kerosene heaters.
And British cars that broke down all the time.[Morris Minors exempted]
Waiting lists for years for a new car.
Import licensing meant over priced goods.
Pubs closing at 6pm.
Today is the best of times,and I expect tomorrow to be even better.!

A few other things some will recall:
Doctor's prescription required to buy margarine (from a chemist)
Illegal to have alcohol within 1 mile of a dance hall.
Illegal to dance in a hotel bar.
Strict limits on taking money overseas. If you couldn't bludge accommodation - it wasn't worth going.
Shopping in weekends allowed only in Brighton, the Christchurch suburb and a Wellington suburb.
Having to collect up 50cent postal vouchers - 1 per day- till you had sufficient to subscribe to an overseas magazine or a 'car coat' a popular style of jacket in its day.
And if you wanted a business or school shirt, you had Hobson's choice of Lichfield. A rugged garment made of sandpaper I think.
The only allowed crockery was govt. owned Crown Lynn brand. Not unlike concrete. You could sometimes buy, smuggled in, decent stuff if you hung round the wharves. The ship crews at great risk used to bring in such forbidden items, crockery, transistors etc.
Almost impossible to get a license to sell liquor in a restaurant, or run a BYO.
One of the most controlled economies and societies in the world. Sir Roger Douglas certainly deserved his knighthood for dismantling much of the nonsense.

[777]

A few other things some will recall:
Doctor's prescription required to buy margarine (from a chemist)
Illegal to have alcohol within 1 mile of a dance hall.
Illegal to dance in a hotel bar.
Strict limits on taking money overseas. If you couldn't bludge accommodation - it wasn't worth going.
Shopping in weekends allowed only in Brighton, the Christchurch suburb and a Wellington suburb.
Having to collect up 50cent postal vouchers - 1 per day- till you had sufficient to subscribe to an overseas magazine or a 'car coat' a popular style of jacket in its day.
And if you wanted a business or school shirt, you had Hobson's choice of Lichfield. A rugged garment made of sandpaper I think.
The only allowed crockery was govt. owned Crown Lynn brand. Not unlike concrete. You could sometimes buy, smuggled in, decent stuff if you hung round the wharves. The ship crews at great risk used to bring in such forbidden items, crockery, transistors etc.
Almost impossible to get a license to sell liquor in a restaurant, or run a BYO.
One of the most controlled economies and societies in the world. Sir Roger Douglas certainly deserved his knighthood for dismantling much of the nonsense.

Most of the above was was changed before Roger Douglas arrived.

[Biscuit]

A few other things some will recall:
Doctor's prescription required to buy margarine (from a chemist)
Illegal to have alcohol within 1 mile of a dance hall.
Illegal to dance in a hotel bar.
Strict limits on taking money overseas. If you couldn't bludge accommodation - it wasn't worth going.
Shopping in weekends allowed only in Brighton, the Christchurch suburb and a Wellington suburb.
Having to collect up 50cent postal vouchers - 1 per day- till you had sufficient to subscribe to an overseas magazine or a 'car coat' a popular style of jacket in its day.
And if you wanted a business or school shirt, you had Hobson's choice of Lichfield. A rugged garment made of sandpaper I think.
The only allowed crockery was govt. owned Crown Lynn brand. Not unlike concrete. You could sometimes buy, smuggled in, decent stuff if you hung round the wharves. The ship crews at great risk used to bring in such forbidden items, crockery, transistors etc.
Almost impossible to get a license to sell liquor in a restaurant, or run a BYO.
One of the most controlled economies and societies in the world. Sir Roger Douglas certainly deserved his knighthood for dismantling much of the nonsense.

You're making me feel all nostalgic FP, it's about time we brought back car-less days don't you think?

[fungus pudding]

You're making me feel all nostalgic FP, it's about time we brought back car-less days don't you think?

Yeah, they were a laugh. Best ignored, or that's how I handled it.

[BIRMANBOY]

By now all the "young" investors will be shaking their heads and starting on their second latte. W69 that was very unkind, uncharacteristically so I must say. Having to deal with Percy is hardly Purgatory.....Hell would be closer to the mark.

[dingoNZ]

I'm relatively 'fresh' to the work force after only finishing university 5 years ago and now a 'working professional'. I am comfortable with my living arrangement. I aim to save about 25/30% of my gross wages, with this I am putting about 75% into equities which I have researched and am comfortable with holding (investing, not trading). The rest I am putting into a interest bearing account and using this to fund trips/activities/emergencies. I am yet to dip into my share portfolio and have been watching it grow over the past 5 years happily.

At some point in the near future I will look at purchasing a house, I am not read to do so now due to career advancement and I may be moving offshore in the next 12 months for a working holiday/OE.

I was told one thing when I was younger, if I was given a stupidly large sum of money, enough to retire off early what life style changes would I make? - my answer is next to none, I would still work, perhaps reduced hours if it permitted and I would do more travel. I would maintain all my current hobbies and activities.

Given my saving pattern I am comfortable that when I do retire (in say 45 years) I will have a comfortable retirement. All assumption above exclude my partners income.

[percy]

By now all the "young" investors will be shaking their heads and starting on their second latte. W69 that was very unkind, uncharacteristically so I must say. Having to deal with Percy is hardly Purgatory.....Hell would be closer to the mark.
lol.Yes I did rather leave myself open for that.!!!!!

[Biscuit]

I'm relatively 'fresh' to the work force after only finishing university 5 years ago and now a 'working professional'. I am comfortable with my living arrangement. I aim to save about 25/30% of my gross wages, with this I am putting about 75% into equities which I have researched and am comfortable with holding (investing, not trading). The rest I am putting into a interest bearing account and using this to fund trips/activities/emergencies. I am yet to dip into my share portfolio and have been watching it grow over the past 5 years happily.

At some point in the near future I will look at purchasing a house, I am not read to do so now due to career advancement and I may be moving offshore in the next 12 months for a working holiday/OE.

I was told one thing when I was younger, if I was given a stupidly large sum of money, enough to retire off early what life style changes would I make? - my answer is next to none, I would still work, perhaps reduced hours if it permitted and I would do more travel. I would maintain all my current hobbies and activities.

Given my saving pattern I am comfortable that when I do retire (in say 45 years) I will have a comfortable retirement. All assumption above exclude my partners income.


I'd give up everything I've worked for, everything I own to be in my twenties again. If I was 21 again, I'd do exactly what I did then - think not for a second about retirement, grab a backpack and hitch hike round the world. But then I think that life was easier back then.

[fungus pudding]

I'd give up everything I've worked for, everything I own to be in my twenties again. If I was 21 again, I'd do exactly what I did then - think not for a second about retirement, grab a backpack and hitch hike round the world. But then I think that life was easier back then.

That's because you were 21 back then.

[Biscuit]

That's because you were 21 back then.

If you could with the wave of a wand, go back to being 21 in the 1980s or 21 in 2015, which would you choose? I think I'd go with the 1980s. Maybe that is just because I'm bewildered by modernity but maybe things were just a tad easier for people starting out then? You didn't need two incomes to buy a house...

[BIRMANBOY]

As long as you don't take anyone's baby you will be well placed.
I'm relatively 'fresh' to the work force after only finishing university 5 years ago and now a 'working professional'. I am comfortable with my living arrangement. I aim to save about 25/30% of my gross wages, with this I am putting about 75% into equities which I have researched and am comfortable with holding (investing, not trading). The rest I am putting into a interest bearing account and using this to fund trips/activities/emergencies. I am yet to dip into my share portfolio and have been watching it grow over the past 5 years happily.

At some point in the near future I will look at purchasing a house, I am not read to do so now due to career advancement and I may be moving offshore in the next 12 months for a working holiday/OE.

I was told one thing when I was younger, if I was given a stupidly large sum of money, enough to retire off early what life style changes would I make? - my answer is next to none, I would still work, perhaps reduced hours if it permitted and I would do more travel. I would maintain all my current hobbies and activities.

Given my saving pattern I am comfortable that when I do retire (in say 45 years) I will have a comfortable retirement. All assumption above exclude my partners income.

[Biscuit]

As long as you don't take anyone's baby you will be well placed.

A dingo joke Birmanboy? You are lucky to be still living in the 80s then?

[BIRMANBOY]

Thanks to the contract I signed with you earlier in life...I am well placed....not too sure about my soul however but in the meantime Marguerite and I have had a good run.
A dingo joke Birmanboy? You are lucky to be still living in the 80s then?

[fungus pudding]

If you could with the wave of a wand, go back to being 21 in the 1980s or 21 in 2015, which would you choose? I think I'd go with the 1980s. Maybe that is just because I'm bewildered by modernity but maybe things were just a tad easier for people starting out then? You didn't need two incomes to buy a house...

Getting started wasn't easy then either. It's difficult in Auckland, but elsewhere it's not. 21 year old now is looking at an exciting world with more innovation than we saw. When I was a kid we had a copper for the washing, a safe for meat etc., coal range, open fires and a large villa with one power point in the living room for a radio, which was nearly the swine of the house. Even the record player (gramophone) was a wind - up invention with doors to open for volume control. We were the first in the street to get a telephone which was on a party line with all sorts of people. Flying was for the well heeled. 'Technology has never moved as fast as it has in our life times, and will never move this slow again.' Today's 20 year olds are in for an exciting time.

[Beagle]

Okay, we've all had a good look down memory lane so its well overdue that someone actually tried to give a serious answer. Being the resident number cruncher and the one responsible for daring to open this retirement can of worms I guess I should bring out the trusty abacus and give this a serious crack. Please re-read my post below to get this thread back into context.


I agree and see that as a minimum target BUT here's another perspective from some retiree's I know well.

Mary has retired and lost her second husband to cancer many years ago. She lives in Turangi and is actively involved in the community and has very little in the way of retirement savings BUT she makes jams and pickles and knits colourful baby booties with pictures of cute farm animals on top which she sells at the fortnightly markets down there, often to tourists passing through. She makes about $300-400 per fortnight and she lives reasonably comfortably on that and her national super in her unencumbered home there which is basic and not worth much more than $100K but she seems happy enough.

Sylvia lost her husband a few years ago and lives on the National super plus a modest super policy her husband took out many years ago which pays for the monthly management fees, (about $550 a month) in the village she enjoys with a supportive and caring community. Her son manages a very small portfolio which pays her another $60 a week and she seems happy and well able to meet all her bills and travels down to see her extended family in Southland quite often.

Neil and Chris didn't have any money when they retired, in fact due to non existent retirement planning, excessive spending and some unfortunate events they still had a $200K mortgage on their modest Auckland family home. They love animals, (former manager of Animal welfare centre in Auckland), and didn't have enough room for their many different animal's and strays they took in at their home. They traded down to an nice unencumbered 8 acre property in Te Kuiti which cost around $250K from memory and run a full suite of chooks, pigs, sheep, goats e.t.c. as well as domestic animals they love including cats and dogs and seem very content. The bonus is they're close enough to Auckland and have room for their kids to come visit on the weekends and the kids seem to like having a break from Auckland.

Proof that you don't need an absolute fortune to retire on ?

Others I know have converted part of their house into a separate flat and rented it out and seem to be doing fine on one lot of rent plus the Supernanuation.

I wouldn't advocate aiming too low but I think we can all agree that human beings provided they're adaptable are capable of more than one way of skinning this retirement cat.

There's also the point that there's absolutely no guarantee whatsoever that you'll make it to say the age of 70 and even if you do its odds on favourite that you'll enjoy spending that XYZ amount of discretionary spend a lot more in your thirties, forties or fifties than you will in your nineties. Food for thought ? I think a balanced approach is best.

I've probably erred on the side of enjoying it as you go a little too much but you've got to call this thing as you see it.

What the heck is going on ? I am starting to like Paul Henry's new Breakfast T.V. show :eek2: This is both scary and refreshing as the other breakfast T.V. channel has become so politically correct and lightweight its quite frankly nauseating at times.

This morning while TV1 tried to pretend they had the scoop on Gloriavale, (really John Campbell has this by the teeth and deserves all the credit), our very politically incorrect Mr Henry, (he is so politically incorrect I find him actually refreshing), had a really good segment celebrating AIR N.Z.'s 75th birthday with some really good historical clips, (he said we should be proud of our great airline, good on him), and then had a very good segment on retirement planning asking the very question I've asked in this thread. Help WTF ??? is Paul Henry stalking me and my threads lol.

He had what appeared to be a well educated expert on from AMP, (they're sponsors of the show), and anyway for those that missed it here's what unfolded.
First up it was made clear that the first question to answer was what level of income do you need in retirement to be comfortable and that everyone's definition of comfortable would be different.

Fortunately, (to put us all out of our misery), there's been a major study done in Australia the conclusion from which was that by average consensus and based on cost of living this figure is $52,000 per annum.

Many will want to debate that figure but keep in mind that when you retire lets assume you are mortgage free and your kids are no longer bleeding you for cash every five seconds.

I'm not familiar with the study but one would presume a moderate level of comfort in retirement included all the basics of living plus some allowance for holidays, running a reasonable car e.t.c. as well as money left over to help one's grandkids e.t.c. The figure seems reasonable to me so for the sake of argument lets assume I use this figure to answer the question I posed at the start of this thread.

Now I will share my own perspective on National Super as making an assumption about this is fundamental to retirement planning

We are fortunate to live in N.Z. which ever since Michael Joesph Savage initiated the social welfare system in 1935 I believe the Government has a mandate to look after the needy and less fortunate in our society. The contract for National Superannuation is something that is well embedded in our society, (you pay for it as you earn), and I honestly believe no political party would be able to completely abolish it. Yes I think there needs to be tinkering around the margins and there probably will be at some stage, probably some sort of national super surtax and maybe extending out the eligibility age to say 67... but at its core, this system remains intact, I think this is fairly certain, (not absolutely certain but to be frank neither is the question of whether one will in fact make it to their retirement age in the first place).

So working backwards, what is the current level of superannuation ? You can find the answer here for your circumstances http://www.workandincome.govt.nz/map/deskfile/nz-superannuation-and-veterans-pension-tables/new-zealand-superannuation-and-veterans-pension-ra.html

So for a married couple the gross super is presently $33,935.20 per annum indexed and adjusted for inflation each year, lets call it $34,000 to make the maths more simple.

So if we accept that once your kids have left home and you are mortgage free you can retire comfortably on $52,000 income per year that leaves only another $18,000 a year to find.

So therefore someone with some skill to manage their finances, (probably most on here would fall into that category I would hope), should surely be able to average 7% gross per year and therefore the amount you need to retire on is 18,000 / .07 = $257,000.

But wait there's more :)

Looking back at the illustrations I provided above many people have some sort of other income. For example we have a downstairs flat that's separate to our debt free house and that could easily bring in $350 a week rent if it wasn't being let to our daughter for a considerably subsidised sum, and even assuming a conservative occupancy rate of say 80% I think that would bring in about $14,500 per annum so in theory I would only need to find another $3,500 per annum to have a comfortable retirement.

$3,500 / .07 = $50,000. So there's my answer. Outrageous as it seems it would appear I have this conundrum shot to bits already. I might be able to skip my blood pressure tablet today :)

In all seriousness, I think a LOT of SCAREMONGERRING goes on in this retirement savings sector, mainly by parties with a vested interest. The reality as I have graphically illustrated in the examples re-posted above is the amount needed isn't some vast unattainable sum that you need to scrimp and save for your while working life, save so hard as to be worried and have a miserable existence in your youth and middle age. Life is for living and enjoyment and provided some common-sense is used I think the vast majority of us are going to have our retirement organised just fine.

[Biscuit]

I think that is probably true IF you want to work into your late 60s. Who would want to do that?

[percy]

Roger.
Are to trying to convince us or your wife????
I have a serious suspicion you are looking at Jags again????

[Beagle]

I think that is probably true IF you want to work into your late 60s. Who would want to do that?

Most people get horribly bored with nothing to do all day. Studies I've seen suggest people will be working well into their sixties.



Roger.
Are to trying to convince us or your wife????
I have a serious suspicion you are looking at Jags again????

Mate, you're a legend and a bloody mind reader. I'm going down to buy my new supercharged Jaguar this afternoon :D....Just gotta convince my wife first lol

[Biscuit]

[QUOTE=Roger;570217]Most people get horribly bored with nothing to do all day. Studies I've seen suggest people will be working well into their sixties.

I agree with that to some point, I think people probably overestimate how much they need to be happy. But, take away my investments and I will have to work into my 60s. Decent retirement savings means you have more of a choice especially in your 50s and 60s. Knowing I can throw it in and do something else at any time brings more of a smile to my dial than any supercharged car could ever do. But then the only car I've ever owned that I really enjoyed was my first car: the Austin A40.

[Biscuit]

Now that I'm in a nostalgic mood, and talking about supercharged cars. Back when I was about 16 I had a go at supercharging the A40 using mum's vacuum cleaner to blow air down the carburetor. I could never get it to work, turning on the vacuum cleaner just killed the engine. Presumably it needed to blow the air/fuel mix in rather than just the air? Not sure. Anyway probably just as well it didn't work as I doubt the old car could really have coped with a proper supercharger. I have a decent workshop now so could be an early retirement project perhaps.

[percy]

Now that I'm in a nostalgic mood, and talking about supercharged cars. Back when I was about 16 I had a go at supercharging the A40 using mum's vacuum cleaner to blow air down the carburetor. I could never get it to work, turning on the vacuum cleaner just killed the engine. Presumably it needed to blow the air/fuel mix in rather than just the air? Not sure. Anyway probably just as well it didn't work as I doubt the old car could really have coped with a proper supercharger. I have a decent workshop now so could be an early retirement project perhaps.

Classic!!!
I think you needed to drill out the carburettor jets,ie really richen up the mixture.
Most probably the latest vacuum cleaners, with variable speed, may be easier to get the right pressure?

[Beagle]

Absolutely if you want to retire early by all means plan for and go hard for that. My plan is just that, a plan for me. By and large I enjoy my work and especially enjoying working my investments both of which I'll probably be doing part time into my seventies. I get bored easily if I'm not busy doing something.
Regarding whether to choose your Austen A 40 or the car in this clip....hmmmm that's a tough one, I'd have to think really hard about that :)
https://youtu.be/DMbSfkh9WaQ

[Biscuit]

Classic!!!
I think you needed to drill out the carburettor jets,ie really richen up the mixture.
Most probably the latest vacuum cleaners, with variable speed, may be easier to get the right pressure?

Do the latest ones have really long leads?

[Biscuit]

Absolutely if you want to retire early by all means plan for and go hard for that. My plan is just that, a plan for me. By and large I enjoy my work and especially enjoying working my investments both of which I'll probably be doing part time into my seventies. I get bored easily if I'm not busy doing something.
Regarding whether to choose your Austen A 40 or the car in this clip....hmmmm that's a tough one, I'd have to think really hard about that :)
https://youtu.be/DMbSfkh9WaQ

Roger, it doesn't even have a tow bar!

[Beagle]

You confuse doing something with paid employment. There are plenty of things someone can do in their day that does not involve "work". You can become a serious gardener, competitive flower grower, stock market trader, animal rescuer, charity worker, volunteer, board director, council member, antique collector/seller, etc. You just need to find something you enjoy doing and focus on doing it.

Quite right and its good to make a solid contribution to society no question about that. You forgot to include dog breeder :) Satan who cares, just look at it drive it and listen to it...there's even room in the boot for my three dogs, game over, I rest my case...wish the wife would come home and I can start to go to work on convincing the one that I have learned it is best not to argue with lol

On a serious note hopefully I've given some encouragement to those that are either late starters or non starters on their retirement plans and from the illustrations provided shown there's more than one way to skin the retirement cat. Others may take the view that they're happy to sacrifice some enjoyable activities in their 30's, 40's, 50, and 60's so that when they're decrepit lying in some nursing home / dementia ward in their nineties they can be sure they can afford the best available health care.,..(if they get to their nineties) and I say all the best to you if you want to live life that way but for my money I think talk of people needing $5m - $10m at retirement to be sure of the best care is living life backwards and you're priorities are skewed all wrong...it seems a bit outrageous that a conservative bean counter would suggest living life to the fullest doesn't it :D

As in all things finding the right balance and moderation is the key. Leaving aside as a separate issue one's altruistic tendencies and one's desire to leave stuff to their kids, when its all said and done investment is merely deferred consumption. How can anyone be sure they'll even live until they're 80 or later so why defer so much consumption until you're too old to truly enjoy it ?

I've seen people in their 50's with millions driving around in ****ty old cars and dressed in cheap clothes, too scared to buy a decent car / boat or holiday home, trapped in their own sense of insecurity, its crazy !!

[BIRMANBOY]

Agree...sort of ...I tried that when I was younger.....all I got was a case of the clap and a trail of bounced checks.... (just kidding of course...mustn't pass up an opportunity for a cheap laugh!!

I am a firm believer in doing more of what you love doing, doing it well enough and often enough to become a professional at it, and you will find that the money will follow.

[BIRMANBOY]

Sounds to me like you are trying very hard to justify your excessive purchases of 'the baubles of office".:p
Quite right and its good to make a solid contribution to society no question about that. You forgot to include dog breeder :) Satan who cares, just look at it drive it and listen to it...there's even room in the boot for my three dogs, game over, I rest my case...wish the wife would come home and I can start to go to work on convincing the one that I have learned it is best not to argue with lol

On a serious note hopefully I've given some encouragement to those that are either late starters or non starters on their retirement plans and from the illustrations provided shown there's more than one way to skin the retirement cat. Others may take the view that they're happy to sacrifice some enjoyable activities in their 30's, 40's, 50, and 60's so that when they're decrepit lying in some nursing home / dementia ward in their nineties they can be sure they can afford the best available health care.,..(if they get to their nineties) and I say all the best to you if you want to live life that way but for my money I think talk of people needing $5m - $10m at retirement to be sure of the best care is living life backwards and you're priorities are skewed all wrong...it seems a bit outrageous that a conservative bean counter would suggest living life to the fullest doesn't it :D

As in all things finding the right balance and moderation is the key. Leaving aside as a separate issue one's altruistic tendencies and one's desire to leave stuff to their kids, when its all said and done investment is merely deferred consumption. How can anyone be sure they'll even live until they're 80 or later so why defer so much consumption until you're too old to truly enjoy it ?

I've seen people in their 50's with millions driving around in ****ty old cars and dressed in cheap clothes, too scared to buy a decent car / boat or holiday home, trapped in their own sense of insecurity, its crazy !!

[percy]

Do the latest ones have really long leads?

Get a battery one.
Then install a solar panel on the A40's roof to charge the battery.
You will be spending a lot of time on the side of the road adjusting both the mixture and the vacuum cleaner pressure,so the solar panel will be able to charge up your battery.
If you think you will have trouble getting the engine started have a look at you tube "Wynn's 'start you bastard' engine additive advert". It really works.!!

[Aaron]

Not sure if these links work but to flog a dead horse.
I guess the article assumes that the current system for NZ Super is sustainable. Is NZ Super a Ponzi scheme or has money been put aside to cover it. I am not sure as it wasn't debated in the last election and that is the stuff I leave to my elected leaders in government to work out.
http://www.stuff.co.nz/business/money/68277695/kiwis-dont-need-a-million-bucks-to-retire

[Beagle]

Not sure if these links work but to flog a dead horse.
I guess the article assumes that the current system for NZ Super is sustainable. Is NZ Super a Ponzi scheme or has money been put aside to cover it. I am not sure as it wasn't debated in the last election and that is the stuff I leave to my elected leaders in government to work out.
http://www.stuff.co.nz/business/money/68277695/kiwis-dont-need-a-million-bucks-to-retire

Thanks for sharing. Interesting that they arrived at a figure of $350,000. I arrived at $257,000 in post #104 for a comfortable retirement, (less or nearly nothing if you have a freehold rental property), but the key assumption underlying my figure was that you could earn an average of 7% gross per annum on a balanced portfolio of investments which is probably not too tough for those of us on here, most of whom seem to be intelligent investors. Good article that sheds some more light on this mystery, thanks for sharing.

Percy mate, I haven't bought that supercharged Jaguar yet....my appetite for one got significantly blunted this week when I took our 8 year old Mercedes-Benz in for some suspension repairs :eek2:

[macduffy]

All these estimates are a waste of time if you don't take account of individual needs and lifestyles. A bit like the much touted "living wage" - for a single person living in, say, Ashburton or Marton? Or for a person with dependants living in Auckland or Christchurch?

Now, I've got that little matter off my chest, back to earning enough for a living wage and a comfortable retirement!

;)

[Beagle]

No question each person needs to account for their desired lifestyle in retirement, a point I believe I made earlier...but I think a useful starting point is to get a general idea of what's an average target so people can start using that as an opening frame of reference in their considerations...and in that respect if I do say so myself, I think this thread has been a real success.

[percy]

[QUOTE=Roger;571461.

Percy mate, I haven't bought that supercharged Jaguar yet....my appetite for one got significantly blunted this week when I took our 8 year old Mercedes-Benz in for some suspension repairs :eek2:[/QUOTE]

Roger,a word to the wise;
If you ever want to retire with capital, there are two important names you should always think of when your mind turns to vehicles,Toyota and Nissan.

[Beagle]

Yep there's no doubt about if my friend, if you want to retire and drive fancy European cars and update them every so often one is going to need a heck of a lot more than $257,000. I think this explains why you see so many retired folk driving fairly modest Japanese made cars. Cheap to buy, fuel-up, maintain and they're durable. Right sizing one's expectations in regard to standard of living in retirement is one of the key aspects of addressing this conundrum :)

[fungus pudding]

Roger,a word to the wise;
If you ever want to retire with capital, there are two important names you should always think of when your mind turns to vehicles,Toyota and Nissan.


You could add Honda and Mazda as well.

[artemis]

Not sure if these links work but to flog a dead horse. I guess the article assumes that the current system for NZ Super is sustainable. Is NZ Super a Ponzi scheme or has money been put aside to cover it. I am not sure as it wasn't debated in the last election and that is the stuff I leave to my elected leaders in government to work out......

About the sustainability of NZ (universal) super. Couple of years ago The Treasury produced some forward projections on this topic, among others. They reckoned that raising the entitlement age to 67 over time and also tying increases to inflation rather than wages would work. With some provisos.


Report is below, an interesting read.

http://www.treasury.govt.nz/government/longterm/fiscalposition/2013/quickguide/ltfs-13-aof-qg.pdf

[fungus pudding]

Why??????????????????????????????

Reliability.

[percy]

Reliability.

Yes I should have included them.I don't have experience with Honda,but I recently had a Mazda rental car.Drove really well,and the rental car company spoke well of them

[Aaron]

http://www.stuff.co.nz/business/money/68454168/home-ownership-now-for-privileged-few--act

Sounds like ACT has lost its way. This from the party of the privileged. I like the direction he is taking but don't believe that it is part of ACT's principle's.
They want less taxes and government interference. This would benefit the well-off including those who inherit their parents wealth. The privileged people he talks about in his article are his voter base so he had better shut up or risk ACT polling even worse next election unless of course they give up their principles and move to the centre. Labour/ACT coalition sounds good.
It is nice to think that at least one politician gives a s**t about the next generation.
Having just had ANZAC day commemorating the NZers who were prepared to sacrifice their lives for our country it is disappointing to think of all the current generation who are not even prepared to sacrifice their National Super and comfortable lifestyle. I am not suggesting let old people starve but if someone is well off and generating a good income (passive or active) then they don’t need welfare. Stop ripping off the young generation with the current, soon to be unaffordable super scheme.

[fungus pudding]

http://www.stuff.co.nz/business/money/68454168/home-ownership-now-for-privileged-few--act

Sounds like ACT has lost its way. This from the party of the privileged. I like the direction he is taking but don't believe that it is part of ACT's principle's.
They want less taxes and government interference. This would benefit the well-off including those who inherit their parents wealth. The privileged people he talks about in his article are his voter base so he had better shut up or risk ACT polling even worse next election unless of course they give up their principles and move to the centre. Labour/ACT coalition sounds good.
It is nice to think that at least one politician gives a s**t about the next generation.
Having just had ANZAC day commemorating the NZers who were prepared to sacrifice their lives for our country it is disappointing to think of all the current generation who are not even prepared to sacrifice their National Super and comfortable lifestyle. I am not suggesting let old people starve but if someone is well off and generating a good income (passive or active) then they don’t need welfare. Stop ripping off the young generation with the current, soon to be unaffordable super scheme.

Superannuation has to be universal or it would be a disaster with little incentive to save - or under the mattress savings.

[Aaron]

Superannuation has to be universal or it would be a disaster with little incentive to save - or under the mattress savings.
What are you proposing FP keep paying it out until we run out of money? That might work for the older generation.

How about make Kiwisaver compulsory as an option. Pay it out as an annuity though, as after a new car, world trip and house renovation a lump sum could disappear pretty quick.

I know saving for retirement might bite me in the arse as I will always probably be on the cusp of getting assistance from the rest of the country (government) but not quite as I have saved.

It will upset me if someone who has been on the dole all their life then retires about as comfortably as me and has the same access to healthcare but I would still rather try and contribute to society instead of taking what I can get. Living on a welfare payment including NZ Super isn’t what most people aspire to.

There was a party at the last election who attempted to address this issue with some policy but it wasn't what the people wanted.

[BIRMANBOY]

If you stopped bleating on about "undeserved super", and wasting valuable work time on forums then you would probably find that its all a non-event. Sorry must run...off to spend my super payment on some wildly extravagant items like groceries. Ta ta and thanks for being such a good sport and contributing...like we have for the last 50 years or so.
What are you proposing FP keep paying it out until we run out of money? That might work for the older generation.

How about make Kiwisaver compulsory as an option. Pay it out as an annuity though, as after a new car, world trip and house renovation a lump sum could disappear pretty quick.

I know saving for retirement might bite me in the arse as I will always probably be on the cusp of getting assistance from the rest of the country (government) but not quite as I have saved.

It will upset me if someone who has been on the dole all their life then retires about as comfortably as me and has the same access to healthcare but I would still rather try and contribute to society instead of taking what I can get. Living on a welfare payment including NZ Super isn’t what most people aspire to.

There was a party at the last election who attempted to address this issue with some policy but it wasn't what the people wanted.

[Beagle]

N.Z Super isn't a welfare payment. Its a government superannuation payment, a repayment of the social contract entered into when national super was first envisaged. Many people have been paying tax for nearly 50 years before collecting super and it was always envisaged that a significant component of the massive tax they paid over so many decades would see them entitled to superannuation at I believe two thirds of the average wage in their retirement. We can debate whether there needs to be some tinkering around the edges, possible increase in the age of eligibility due to people living longer and possible national super surtax but I believe calling it a benefit is inappropriate and inaccurate. (Some people will see this as a mere discussion about semantics but please keep in mind our upmost respect for our elderly folks who may perhaps feel its something of a slight on their character to call them beneficiaries).

Anyway back to the subject at hand. I came to a decision yesterday. I'm not going to be aiming to drive an expensive European car in my retirement. When the current one eventually dies then so be it. This takes all the pressure off for me and sheets me back to the number I outlined in post #104. I'm sorted :) (with apologies to the www.sorted.co.nz website which in itself is a very good website to visit).

[Kees]

I get mine in a couple of month, a few years ago I was always saying they can stick it were the sun don't shine, but after reading the bleating that goes on from the younger generation i have changed my mind and will now be excepting it with open arm just to F#ck you's off.

[Aaron]

I get mine in a couple of month, a few years ago I was always saying they can stick it were the sun don't shine, but after reading the bleating that goes on from the younger generation i have changed my mind and will now be excepting it with open arm just to F#ck you's off.
Whatever Kees, justify it however you like. I know if there is a handout when I retire I will take it with both hands if it is on offer as well.

Roger I don't mean to upset people, I just wonder if national superannuation is affordable and should people who don't need any help get it.
Your argument is that you have paid taxes all your life so you should get some back. I gave a link to the government accounts to 30/06/2014 further back in this thread. The financial statements don’t show that much money was put aside to fund national super in fact our net worth is $80billion while annual national super costs are $10 billion. Not nearly enough has been put aside for national super and we currently run annual deficits. I think the Cullen fund is something like $14bill but not sure where it is shown in the accounts. I am sure most people on this website could breakdown the figures better than me.
I think people have got their heads in the sand and are hoping John Key will make it alright by not discussing the issue. Maybe I worry too much and need to wait and see if there really is an issue further down the track but it would be a shame to look back in twenty or thirty years from now and say “what a shame we didn’t think long term a bit sooner. What a shame these old people have to live on next to nothing but unfortunately we can’t afford it now”. John Key won’t need National Super so he doesn’t need to talk about it but there are a lot of NZers who do, now and in the future.
It is not an attack on old people more like ensuring we as a nation can help those who need it now and in the future.

[stoploss]

Whatever Kees, justify it however you like. I know if there is a handout when I retire I will take it with both hands if it is on offer as well.

Roger I don't mean to upset people, I just wonder if national superannuation is affordable and should people who don't need any help get it.
Your argument is that you have paid taxes all your life so you should get some back. I gave a link to the government accounts to 30/06/2014 further back in this thread. The financial statements don’t show that much money was put aside to fund national super in fact our net worth is $80billion while annual national super costs are $10 billion. Not nearly enough has been put aside for national super and we currently run annual deficits. I think the Cullen fund is something like $14bill but not sure where it is shown in the accounts. I am sure most people on this website could breakdown the figures better than me.
I think people have got their heads in the sand and are hoping John Key will make it alright by not discussing the issue. Maybe I worry too much and need to wait and see if there really is an issue further down the track but it would be a shame to look back in twenty or thirty years from now and say “what a shame we didn’t think long term a bit sooner. What a shame these old people have to live on next to nothing but unfortunately we can’t afford it now”. John Key won’t need National Super so he doesn’t need to talk about it but there are a lot of NZers who do, now and in the future.
It is not an attack on old people more like ensuring we as a nation can help those who need it now and in the future.

Hi Aaron ,
Think the Govt has put in around 13 Bio to the fund , but as you can see from this it is worth double that ........
https://www.nzsuperfund.co.nz
Undoubtably the age of super eligibility will rise as it has elsewhere. However John Key got sucked in during a live political debate with Helen Clark and made the promise that as long as he was PM that the age would not rise.
Obviously there is a bad legacy a la Muldoon and national super, so it is something that it looks very unlikely he will ever back down upon , even though official advice is it should rise . I could only see it happening if there was an agreement across all parties going into the next election .Even then I imagine it will be gradually introduced so say those above 40 now will not be affected.

[Beagle]

Whatever Kees, justify it however you like. I know if there is a handout when I retire I will take it with both hands if it is on offer as well.

Roger I don't mean to upset people, I just wonder if national superannuation is affordable and should people who don't need any help get it.
Your argument is that you have paid taxes all your life so you should get some back. I gave a link to the government accounts to 30/06/2014 further back in this thread. The financial statements don’t show that much money was put aside to fund national super in fact our net worth is $80billion while annual national super costs are $10 billion. Not nearly enough has been put aside for national super and we currently run annual deficits. I think the Cullen fund is something like $14bill but not sure where it is shown in the accounts. I am sure most people on this website could breakdown the figures better than me.
I think people have got their heads in the sand and are hoping John Key will make it alright by not discussing the issue. Maybe I worry too much and need to wait and see if there really is an issue further down the track but it would be a shame to look back in twenty or thirty years from now and say “what a shame we didn’t think long term a bit sooner. What a shame these old people have to live on next to nothing but unfortunately we can’t afford it now”. John Key won’t need National Super so he doesn’t need to talk about it but there are a lot of NZers who do, now and in the future.
It is not an attack on old people more like ensuring we as a nation can help those who need it now and in the future.

Fair enough Aaron.

Many of you won't recall or perhaps aren't even aware that at one stage we did indeed have a national superannuation surtax, (sorry I can't remember when it was instituted and then subsequently abolished), but ostensibly it operated in a similar manner to the Australian scheme whereby retiree's with personal income over a certain level had their superannuation reduced by a certain rate for every extra dollar they earned.

In Australia as I understand it, a retiree with $72,000 of personal income becomes ineligible for their super, (its abated before that personal income threshold). I understand they have tinkered with this in their latest $35b deficit budget yesterday and a tougher system has been implemented.

IIRC...we are going back over 20 years here... it became something of a political football and was it Labour that promised to abolish it ?, someone help me out here please.

As a nation I agree that we probably need to have another look at super's affordability. Should someone earning north of $100K and 65 years old still be eligible for super ?

Its such a can of worms. Wealthy people will simply move assets to family trusts if they haven't already and there's so many ways to skin a cat in terms of a family trust making non cash distributions to beneficiaries who are also trustee's so even if you go for full look-through provisions in family trusts in terms of revenue distributions there's nothing to stop trusts owning fancy houses and paying all the outgoings, also beach houses, luxury cars, boats e.t.c....Where do you draw the line...do we go so far as to have a fringe benefit system for family trusts for wealthy retiree's, surely that's a bridge too far, or maybe not ?

Also people are living longer with advances in healthcare so maybe raising the age of eligibility makes the simplest and most effective sense in terms of making the system affordable, I don't know but I reckon raising it to say 67 or 68 makes sense. Maybe even 70 ? I'll probably work till I'm 70 (at least part time), but I have a desk job, obviously its much tougher for someone like a builder or a panelbeater.

I think instituting Kiwisaver was a good thing the Govt did...maybe its inevitable its becomes compulsory at some stage ?

[Aaron]

Roger you don't work for stuff.co.nz do you they seem to be as hot on this issue of how much do you need. The latest which you may have already read.
http://www.stuff.co.nz/business/money/68471792/how-to-save-a-million-by-age-65
Here is hoping we can generate better returns than what he is proposing in this article. Although based on history I would be glad of 5% as some years my investment return has been negative.

[Beagle]

Roger you don't work for stuff.co.nz do you they seem to be as hot on this issue of how much do you need. The latest which you may have already read.
http://www.stuff.co.nz/business/money/68471792/how-to-save-a-million-by-age-65
Here is hoping we can generate better returns than what he is proposing in this article. Although based on history I would be glad of 5% as some years my investment return has been negative.

I think the media are stalking me lol including Paul Henry who had the segment a while back on the same topic.
Thanks Aaron, I'll look forward to reading that later today when I get some more time, better do some work now (to save for my retirement lol).

Anyway...I managed to dig this history of N.Z's super out for you and others to have a look through and I'll also enjoy reading it later. It looks at how they've tinkered with the system over the decades to make it more affordable.
http://www.goodreturns.co.nz/article/976486067/super-history-understanding-recent-changes.html

[fungus pudding]

Fair enough Aaron. Many of you won't recall or perhaps aren't even aware that at one stage we did indeed have a national superannuation surtax, (sorry I can't remember when it was instituted and then subsequently abolished), but ostensibly it operated in a similar manner to the Australian scheme whereby retiree's with personal income over a certain level had their superannuation reduced by a certain rate for every extra dollar they earned.

In Australia as I understand it, a retiree with $72,000 of personal income becomes ineligible for their super, (its abated before that personal income threshold). I understand they have tinkered with this in their latest $35b deficit budget yesterday and a tougher system has been implemented.

IIRC...we are going back over 20 years here... it became something of a political football and was it Labour that promised to abolish it, someone help me out here please.

As a nation I agree that we probably need to have another look at super's affordability. Should someone earning north of $100K and 65 years old still be eligible for super ?



Yes. Any move to target super will have negative consequences. Best to encourage more people to retire on over 100k. You client on over 500k will be paying tax of over 155,000 and receive around 11,000 (if individual) so taxman is still up over 140k. I know a few people like that and they generally are very generous, especially with charitable donations. Certainly they don't need it, but there's no other single argument to support removing it.

[Aaron]

Food for Thought
http://www.stuff.co.nz/national/politics/68616805/pensioners-profit-while-the-young-fall-behind

[artemis]

Food for Thought
http://www.stuff.co.nz/national/politics/68616805/pensioners-profit-while-the-young-fall-behind

I expect to see more targeted assistance for low income people in the Budget rather than across the board increases. That fits with the government's investment approach, which I agree with.

[Beagle]

Food for Thought
http://www.stuff.co.nz/national/politics/68616805/pensioners-profit-while-the-young-fall-behind

As a society I think we bend over backwards and turn cartwheels to support needy children in our society. The working for families child support system is incredibly generous and the more children you have the more you get to the point where some large families are eligible for circa $1,000 a week payments.

Surely I can't be the only one who is asking where does personal responsibility come into this ? If you can't afford to raise children properly why should other taxpayers be expected to subsidise your desire to have a large family when often those choosing to have one are least equipped to afford it ?

There's something fundamentally wrong going on here. Enough is enough, we raised two children without government assistance, why should I pay for families that may have only paid tax for a few years, if at all, that chose to have ten ?

If retirees who have earned the right to their superannuation through payment of taxes all their lives are better off than beneficiaries who haven't earned that right, then I have no problem with the apparent social injustice this situation appears to suggest.

As mentioned earlier, people over 65 are getting superannuation, this is not a benefit per se, its a super payment based on their contributions. The two types of payments continue to deserve to be treated quite differently because one is earned and the other should be pegged at a modest level to discourage state dependency by working age adults.

[BIRMANBOY]

LOL personal responsibility has, along with Elvis, left the building. Its a slippery slope that is lubricated by a constantly changing amount of socialistic government policies implemented to ensure politicians stay in power as long as possible. The classic case of good intentions undone by failure to understand the current realities of human nature.
As a society I think we bend over backwards and turn cartwheels to support needy children in our society. The working for families child support system is incredibly generous and the more children you have the more you get to the point where some large families are eligible for circa $1,000 a week payments.

Surely I can't be the only one who is asking where does personal responsibility come into this ? If you can't afford to raise children properly why should other taxpayers be expected to subsidise your desire to have a large family when often those choosing to have one are least equipped to afford it ?

There's something fundamentally wrong going on here. Enough is enough, we raised two children without government assistance, why should I pay for families that may have only paid tax for a few years, if at all, that chose to have ten ?

If retirees who have earned the right to their superannuation through payment of taxes all their lives are better off than beneficiaries who haven't earned that right, then I have no problem with the apparent social injustice this situation appears to suggest.

As mentioned earlier, people over 65 are getting superannuation, this is not a benefit per se, its a super payment based on their contributions. The two types of payments continue to deserve to be treated quite differently because one is earned and the other should be pegged at a modest level to discourage state dependency by working age adults.

[Beagle]

LOL personal responsibility has, along with Elvis, left the building. Its a slippery slope that is lubricated by a constantly changing amount of socialistic government policies implemented to ensure politicians stay in power as long as possible. The classic case of good intentions undone by failure to understand the current realities of human nature.

Sad but very true unfortunately. The irony that quite a bit of this well intentioned family support for these irresponsible breeders comes back to the government in the form of tobacco and alcohol taxes and TAB profits isn't lost on me.

[Bjauck]

...As a nation I agree that we probably need to have another look at super's affordability. Should someone earning north of $100K and 65 years old still be eligible for super ?...

I think it also depends on other assets owned and whether the person owns their own home or not. For example if a person has a multi-million dollar home should they receive the same state benefit as someone with a $250,000 home.?

What about pensioners who do not own their home at all and would therefore need to find rent out of tax paid income? The pensioner in the multi-million dollar mansion has an asset, the benefit derived therefrom remaining untaxed. This will increasingly be an issue for retiring Aucklanders as home ownership rates are falling.

I think any pension means testing should include all assets and not exempt the value of a home. Otherwise the system would encourage the acquisition of "palaces" as a way to store wealth and pass down to heirs.

[Bjauck]

...There's something fundamentally wrong going on here. Enough is enough, we raised two children without government assistance, why should I pay for families that may have only paid tax for a few years, if at all, that chose to have ten ? ..

Fair point to an extent. Though dictating family size would be Orwellian. Some people are net recipients of government largesse at certain points of their life and at other points become net contributors. Some of the children who were in poor families grow to be net contributors as a result of being able to grow up healthier as a result of government help to their poor parents.

I am not sure how any poorer family could avoid GST - unlike wealthier families who can afford to invest money. Granted in many cases it would not balance out other government credits and benefits over their lifetime. It would be great if you could target only the children for assistance. However some parents too may have had their earning capacity affected by accident or illness.

If you don't provide assistance to the poor families, then you may have to pay for security compounds, self-defence classes and weapons as those poor kids turn to crime. So increasing social division and deprivation could become more costly to the wealthier than the status quo of a tax supported comprehensive system of benefits.

Government help for raising kids is pervasive. There is state provided help to wealthy families too. Did your kids see the dental nurse, have an accident or go to a subsidised doctor or hospital? Did they go to a state school or even a private school?
http://www.scoop.co.nz/stories/ED1304/S00098/prime-minister-increases-kings-college-funding-by-40.htm

[Aaron]

As a society I think we bend over backwards and turn cartwheels to support needy children in our society. The working for families child support system is incredibly generous and the more children you have the more you get to the point where some large families are eligible for circa $1,000 a week payments.

Surely I can't be the only one who is asking where does personal responsibility come into this ? If you can't afford to raise children properly why should other taxpayers be expected to subsidise your desire to have a large family when often those choosing to have one are least equipped to afford it ?

There's something fundamentally wrong going on here. Enough is enough, we raised two children without government assistance, why should I pay for families that may have only paid tax for a few years, if at all, that chose to have ten ?

If retirees who have earned the right to their superannuation through payment of taxes all their lives are better off than beneficiaries who haven't earned that right, then I have no problem with the apparent social injustice this situation appears to suggest.

As mentioned earlier, people over 65 are getting superannuation, this is not a benefit per se, its a super payment based on their contributions. The two types of payments continue to deserve to be treated quite differently because one is earned and the other should be pegged at a modest level to discourage state dependency by working age adults.
Totally agree on personal responsibility Roger why should, I pay taxes to look after someone else’s parents because they didn’t save enough for retirement, let them starve aye Roger it is their own stupid fault for voting in governments that didn’t put anything aside for them. Especially with their high health care costs enough is enough. Even worse if they earn more than me and don’t need a handout.

Money wasn’t put aside by previous govts for national super and we are running deficits now to cover it so that future generations can pay for it (generational responsibility??? I think it is called a Ponzi scheme) but that said I also think we have some responsibility to the people around us and our local community and our country. We should be providing national superannuation to those who need it for whatever reason they didn’t provide for themselves in retirement.(maybe they leveraged up before the great 2016/17 stock market crash and got wiped out). Think about that when tax cuts are offered as a bribe next elections without any proposal to make universal national superannuation affordable.
Everyone wants a handout no one wants to put into the pot. Most people if they have a couple of kids on an average income will be getting more out than they put in. I haven’t done the figures but suspect I have in dollar terms, as well as growing up in a safe caring society. I suspect if I was richer my views would change but I hope not.

Bjauck makes a good point about what sort of society you want to live in. A caring society with everyone contributing what they can (or are forced to through taxation) or a selfish uncaring one. You will know my personal view that the last election result indicated the latter.

The kids of these parents you talk about Roger didn't get to choose who their parents are. There is a hope that our support via taxes and government organisations that those kids will have a chance to do well for themselves and NZ and not just absolve their parents of any responsibility to raise their own kids.
Asset testing seems a bit harsher as we would end up forcing old people out of their expensive homes to fund their own retirement. Maybe we can afford to leave asset testing for a generation.

Sorry what was this thread about again I keep losing track with my rantings.

[BIRMANBOY]

Yes you are absolutely correct Aaron....The Cambridge Dictionary says about "rant" to speak (http://dictionary.cambridge.org/dictionary/british/speak_1) or shout (http://dictionary.cambridge.org/dictionary/british/shout) in a loud (http://dictionary.cambridge.org/dictionary/british/loud), uncontrolled (http://dictionary.cambridge.org/dictionary/british/uncontrollable), or angry (http://dictionary.cambridge.org/dictionary/british/angry) way, often saying confused (http://dictionary.cambridge.org/dictionary/british/confused) or silly (http://dictionary.cambridge.org/dictionary/british/silly) things:
3Sorry what was this thread about again I keep losing track with my rantings.

[Beagle]

Yes you are absolutely correct Aaron....The Cambridge Dictionary says about "rant" to speak (http://dictionary.cambridge.org/dictionary/british/speak_1) or shout (http://dictionary.cambridge.org/dictionary/british/shout) in a loud (http://dictionary.cambridge.org/dictionary/british/loud), uncontrolled (http://dictionary.cambridge.org/dictionary/british/uncontrollable), or angry (http://dictionary.cambridge.org/dictionary/british/angry) way, often saying confused (http://dictionary.cambridge.org/dictionary/british/confused) or silly (http://dictionary.cambridge.org/dictionary/british/silly) things:

Hits the nail directly on the head and sums the situation up perfectly.

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11453358


"It is important to understand that national superannuation was not a benefit, but an entitlement which most recipients have paid into for 50 years of their working lives. It was theirs by right, not by privilege or charity."Mr Peters said those who wanted to cut super should target the 70,000 migrants who qualified for it after 10 years of living in New Zealand, irrespective of whether they ever paid tax.
Prime Minister John Key said it would be "grossly unfair" to withhold the pension from those who were still working.
"A lot of them, the lowest income New Zealanders with the lowest amount of savings, the combination of work and their pension gives them a much nicer lifestyle in retirement."

I would have thought this is a pretty simple principle to understand...

[Aaron]

The entitlement mentality of some people in NZ is disappointing.
Sorry if I don't agree with politicians on this issue, they have their own scheme which is probably gold plated and did they say that the current system was affordable??
Hey at least we all got our $1,000 Kiwisaver handout shame about future generations.

Good one Birmanboy play the man not the ball. Did you learn that from Muldoon when you voted him in as he spent your savings for national super on think big. Don't worry though I am sure the current government will be happy to keep borrowing though to buy your vote. All the better that future generations can pay it back for you along with their student loans, and large mortgage.

[BIRMANBOY]

Ok here is my last word on this particular subject ....its all about attitude Aaron...not aptitude...attitude. Think about that ..life, success, happiness, security and all those things people strive for are not going to be aided by believing that life is just one giant conspiracy and everyone and everything is taking advantage of you. You (we) have a choice, you can choose to forge ahead with a clear, proactive vision of what you want to achieve in life and how you are going to do it or you can choose to spend time dwelling on all of life's perceived unfairness. Are you a victim or are you an achiever. You alone determine that outcome. Faffing on about these issues on a forum is just so useless...all you are accomplishing is contributing to your own frustration. However all up to you in the end.
The entitlement mentality of some people in NZ is disappointing.
Sorry if I don't agree with politicians on this issue, they have their own scheme which is probably gold plated and did they say that the current system was affordable??
Hey at least we all got our $1,000 Kiwisaver handout shame about future generations.

Good one Birmanboy play the man not the ball. Did you learn that from Muldoon when you voted him in as he spent your savings for national super on think big. Don't worry though I am sure the current government will be happy to keep borrowing though to buy your vote. All the better that future generations can pay it back for you along with their student loans, and large mortgage.

[Aaron]

Sorry couldn't let it go. Just that I am drawn to opinions that agree with my own.

http://www.stuff.co.nz/business/money/69348442/new-zealand-superannuation-the-facts-and-the-fiction

Keeping in mind the thread is about capital requirements in retirement. Just that national super will be an important component for a majority of NZers retirement planning.

[Beagle]

Its certainly been an extremely interesting thread, far more controversial than I anticipated when I started it.

Looking at the comments section after that article its clear there appears to be an inter generational dichotomy of views.

As a society I think its important we do try and raise some of these issues which is partly what motivated me to start this thread.

If you have a look back at the history of n.Z. superannuation for which I posted a link earlier you can see it indeed has been tinkered with quite materially since it's inception.
IIRC originally the scheme's pay-outs were based on over 80% of the average wage and entitlement was from the age of 60.

Now were down to 66% of the average wage and the age of eligibility is 65.

I suspect there is further tinkering that's required to the system as the baby boomer tsunami approaches. As I've suggested before I suspect the age of eligibility will inevitably have to increase as the undeniable fact is that with advances in medicines and technology we're living longer.

Whether we see the level of pay-out reduced further perhaps to circa 60% of the average wage or potentially lower and or some sort of compulsory Kiwi saver scheme introduced remains to be seen.

I think young people need to relax a little and realise that people approaching retirement have been paying taxes all their lives, e.g. who do people in their twenties think has paid for all their education since they were in nappies ?

I remain of the view that super is an entitlement not a benefit per se.

[Cool Bear]

To Aaron, Bb and Roger,

The following paper by Prof Ross Guest is an interesting comparison of the NZ Super vs the OZ age pension. NOTE the terms used are a bit confusing at first. OZ Super is equivalent to our NZ Kiwisaver whereas OZ Age Pension is equivalent to our NZ Super.

Major difference is that OZ Age Pension (equivalent to NZ Super) is means tested which is what Aaron would like to see for our NZ Super

In OZ, they can withdraw their Super (read Kiwisaver) at 60. One unfortunate consequence of means testing is that many will try to spend most of it by 65 so that they are eligible for the full Age Pension! The other interesting fact is that their poverty rate for over 64 is much higher than ours 34.9 per cent compared to our 7%.

http://www.cffc.org.nz/assets/Documents/RI-Review-2013-Comparison-NZ-Aus-Retirement-Income-Systems.pdf

My stand is that our Super should never be means tested - most of us kiwis are far from being fiscally responsible individuals at the moment. Means testing will encourage more to just live for today and spend spend spend and not to worry about tomorrow as we will then get the full super! It will penalise most of us here in ST who are trying to build up a nest egg.

[Aaron]

My stand is that our Super should never be means tested - most of us kiwis are far from being fiscally responsible individuals at the moment. Means testing will encourage more to just live for today and spend spend spend and not to worry about tomorrow as we will then get the full super! It will penalise most of us here in ST who are trying to build up a nest egg.

I agree that most of us kiwis are far from being fiscally responsible individuals.

I don't agree that national super should not be means tested and to get around some issues, I would suggest that after Kiwisaver becomes compulsory you also restrict withdrawals on retirement to an annuity. I don't like managed funds or annuities( I am in kiwisaver for the govt handouts(shame on me but thank you nz)) but if you had means and/or asset testing for National Super an around the world trip, new car and renovated house would see most kiwisaver savings gone in a couple of years after retirement. It would never work unless you force people to take an annuity. Making Kiwisaver compulsory is another way of making life harder for future generations (but possibly a politically acceptable one) while maintaining the current generous system.

I would note the disparity in benefit between old and young in the article I attached above.
A single person seeking work aged over 25 years of age will receive Jobseeker Support of $210.13 after tax.In 2015, a single person aged over 65 and living alone will receive $374.53 per week ($19,475.56 per annum). A difference of $164.40 per week. A jobseeker aged 20-24 years will receive $175.10 after tax - less than half of their retired counterparts. It is unclear why a single retired person needs $165 per week more than a single younger person seeking work.
I am not against old people or the need to look after them in retirement but they older generation were paid to go to University if they were able or wanted to go, something they haven't offered the young people of today. We should be investing in our young people as they are the future of NZ.

[Bjauck]

I think that a one-size-fits-all super payment may have been more appropriate in a more egalitarian NZ. However the poorer retired folk will increasingly need more government assistance. For example in Auckland, fewer people are able to afford the deposits to buy ever more expensive housing. Ownership of residential housing is increasingly becoming less widespread. Those who do not own their own homes when they retire will need help to avoid poverty when they rely on government super.

Many of those who are able to build up a sizeable nest egg of a portfolio of shares (or more likely in NZ, a portfolio of rental property), may have been able to do so as a result of liberal family trust rules and tax reforms from the 1980's onwards - a shift to GST from income tax and as a result of greater inherited wealth as a result of the abolition of death duties. They may have the luxury to now consider government superannuation as pocket money in their retirement.

[Beagle]

I agree that most of us kiwis are far from being fiscally responsible individuals.

I don't agree that national super should not be means tested and to get around some issues, I would suggest that after Kiwisaver becomes compulsory you also restrict withdrawals on retirement to an annuity. I don't like managed funds or annuities( I am in kiwisaver for the govt handouts(shame on me but thank you nz)) but if you had means and/or asset testing for National Super an around the world trip, new car and renovated house would see most kiwisaver savings gone in a couple of years after retirement. It would never work unless you force people to take an annuity. Making Kiwisaver compulsory is another way of making life harder for future generations (but possibly a politically acceptable one) while maintaining the current generous system.

I would note the disparity in benefit between old and young in the article I attached above.
A single person seeking work aged over 25 years of age will receive Jobseeker Support of $210.13 after tax.In 2015, a single person aged over 65 and living alone will receive $374.53 per week ($19,475.56 per annum). A difference of $164.40 per week. A jobseeker aged 20-24 years will receive $175.10 after tax - less than half of their retired counterparts. It is unclear why a single retired person needs $165 per week more than a single younger person seeking work.
I am not against old people or the need to look after them in retirement but they older generation were paid to go to University if they were able or wanted to go, something they haven't offered the young people of today. We should be investing in our young people as they are the future of NZ.

The difference between a benefit for a young person in their early twenties and the superannuation of that of a retired person in their late sixties is that one is a temporary welfare benefit paid to encourage people who into full time work, many of whom have been doing nothing but suck off the taxpayers teat since they were in nappies through the education and family support welfare system and have never contributed a cent to society whereas the latter is an entitlement often earned through contributions to the taxation system for circa 50 years...pretty simple difference really, surely anyone can understand this fundmental difference for goodness sake.

As for being paid to go to University if you wanted to go, what a bloody JOKE...you couldn't be more wrong. If you were smart enough to earn the right to get there and that was a big IF, (B bursary standard 7th form absolute minimum) you were paid a tiny allowance that didn't even cover the cost of textbooks. There was no ability to take tens / a hundred thousand of dollars of interest free student loans with repayment terms spread infinitum often for twenty years or more. Many people worked part time or did 60 hour weeks all holidays like I did on my Uncle's farm for $1 hour to get by and scrape through a bare bones existence. Even then I could only attend Uni with the support of my parents free rent and food support. I vividly remember breaking down and crying when the brake pads on my 100 cc motorbike gave their last breath of life...I had no way in the world to afford the $8 replacement pads.
No generous student allowance of $150 per week, albeit repayable on the never never payment terms or $150 weekly accommodation payment. (I wish there was as I would have gone on and done a masters degree). Uni is far more available and affordable for all these days with or without parental support.

Oh and before you bleat like a lamb lost from its mother and say you have to pay back the student loan consider this, when I was a young fella the top personal tax rate was 66%...you think professionals didn't have to pay back their education costs in another manner doh !!

Every new generation thinks they're hard done by...I'm over it mate and suggest you do the same.

[JBmurc]

IMHIO Kiwisaver will become "compulsory" and in time the nation super will be nothing more than a small credit per week compared to living costs this will happen because of more kiwi's in retirement and more on a benefit (I don't see the future being more labour intensive than present more robots / machines etc.. all banking will be online or ATM ... factories , retail , retail ..etc

I know of many wealth baby boomers that have actually tired to stop their super payments ...as in their eyes its just stupid they have passive incomes upwards million + per year ... they see it better to go to those that need it ,,, wonder how many retired kiwis think the same...

[Bjauck]

The difference between a benefit for a young person in their early twenties and the superannuation of that of a retired person in their late sixties is that one is a temporary welfare benefit paid to encourage people who into full time work, many of whom have been doing nothing but suck off the taxpayers teat since they were in nappies through the education and family support welfare system and have never contributed a cent to society whereas the latter is an entitlement often earned through contributions to the taxation system for circa 50 years...pretty simple difference really, surely anyone can understand this fundmental difference for goodness sake....

I must admit I think that no government payments/benefits can be treated as entitlements. They are all dependant on the policies of the government of the day and the strength of the various lobby and interest groups that influence that government. NZ super is not a specific contributory scheme and is paid from general taxation. When the NZ old age pension was originally introduced, it was subject to a means test. As the disparity of wealth and income in NZ has regressed to Victorian or Edwardian era levels, maybe it is time to reintroduce the means test (provided settlors' wealth tied up in discretionary family trusts is also taken into account). Government payments targeted for need are a much more effective use of taxpayers' money.

[Aaron]

Dear Roger
Not sure how old you think I am, I suspect you have a few years on me but my university education was free(taxpayer funded). I think a small level of fees for university students is a good idea as it will help them focus on what is important. I remember my days at Uni as a lot of fun (maybe too much drinking and not enough study) admittedly I never worried about money or the future back then(poor decision in hindsight). I am concerned that the level of fees required to get a degree is getting to the point where only those kids who have the backing of well off parents can do it, creating a class society. I like the idea that every kid born in NZ has the same chance at a good education. They do what they like with their lives after that but at least they can't say they weren't given a chance. If they do well they can contribute through taxes if they don't then hopefully they aren't just bludgers. Anyway this is off track for the nat super debate.

In the words of Doctor Lisa Marriot. Who you can assume is a lot smarter than me, I have a degree but had to work hard for it as I am of only average intelligence at best.
The fiction
Many believe that New Zealand Superannuation is an entitlement.
Indeed, the universal nature of the pension is one of its many strengths.
Our health system is largely universal, but health care is provided according to need - to those who are sick.
So, why do we automatically pay a pension to those who have no need for the funds?
For argument's sake, New Zealand Superannuation could be tapered back for people with incomes over $50,000 and eliminated by the time this income is $100,000.

In conclusion I enjoy the anonymity of a website debate but hope that we could still share a beer at an Auckland Share Trader meeting one day without letting our difference of opinion get in the way.

[winner69]

Dear Roger
Not sure how old you think I am, I suspect you have a few years on me but my university education was free(taxpayer funded). I think a small level of fees for university students is a good idea as it will help them focus on what is important. I remember my days at Uni as a lot of fun (maybe too much drinking and not enough study) admittedly I never worried about money or the future back then(poor decision in hindsight). I am concerned that the level of fees required to get a degree is getting to the point where only those kids who have the backing of well off parents can do it, creating a class society. I like the idea that every kid born in NZ has the same chance at a good education. They do what they like with their lives after that but at least they can't say they weren't given a chance. If they do well they can contribute through taxes if they don't then hopefully they aren't just bludgers. Anyway this is off track for the nat super debate.

In the words of Doctor Lisa Marriot. Who you can assume is a lot smarter than me, I have a degree but had to work hard for it as I am of only average intelligence at best.
The fiction
Many believe that New Zealand Superannuation is an entitlement.
Indeed, the universal nature of the pension is one of its many strengths.
Our health system is largely universal, but health care is provided according to need - to those who are sick.
So, why do we automatically pay a pension to those who have no need for the funds?
For argument's sake, New Zealand Superannuation could be tapered back for people with incomes over $50,000 and eliminated by the time this income is $100,000.

In conclusion I enjoy the anonymity of a website debate but hope that we could still share a beer at an Auckland Share Trader meeting one day without letting our difference of opinion get in the way.

She a plonker that Doctor Lisa Marriott picking on the elderly - she just does not get it.

Her passion is child poverty

[Bjauck]

She a plonker that Doctor Lisa Marriott picking on the elderly - she just does not get it.

Her passion is child poverty

I don't think her suggestion picks on most elderly. Her suggested income testing of pensioners with a graduated abatement of the pension for those individuals with incomes>$50,000 would hit a minority of seniors. Most seniors' wealth is in their owner-occupied homes (and investor housing) and not in income producing assets as that is what the NZ tax and benefit/subsidy system has encouraged. There is little tax to be had from long-term investor rental housing.

In fact a means tested pension may mean that pension rates are more likely to be maintained at current rates and starting age for those who need it to survive. Maybe one of her passions is to alleviate poverty in general. I would suggest that were means testing introduced, it should also be an asset test (with appropriate threshholds) extending to all assets including owner-occupied housing and family trust assets.

[Aaron]

I don't think her suggestion picks on most elderly. Her suggested income testing of pensioners with a graduated abatement of the pension for those individuals with incomes>$50,000 would hit a minority of seniors. Most seniors' wealth is in their owner-occupied homes (and investor housing) and not in income producing assets as that is what the NZ tax and benefit/subsidy system has encouraged. There is little tax to be had from long-term investor rental housing.

In fact a means tested pension may mean that pension rates are more likely to be maintained at current rates and starting age for those who need it to survive. Maybe one of her passions is to alleviate poverty in general. I would suggest that were means testing introduced, it should also be an asset test (with appropriate threshholds) extending to all assets including owner-occupied housing and family trust assets.
Well said Bjauck.
Interesting article in the Herald this morning from Gareth Morgan re national superannuation. Can't find it online so can't share link but he has a solution in tomorrows paper. Stay tuned.

National's solution appears to be to cut tax rates before the next election if they can squeeze out a surplus before then. This seems almost completely absurd but you can't deny their success last elections and reading some of the comments below Lisa Marriott's (hilarious and scary) this could be the way to go for them to win the next election. I am not convinced this is the best solution to the issue but it is probably based on sound neo liberal principals such as "trickle down" and "people can look after themselves without government interference provided we have a good police force to enforce property rights"

[Aaron]

An opposing view
http://www.stuff.co.nz/dominion-post/comment/columnists/69432111/rosemary-mcleod-you-cant-lump-superannuation-and-welfare-in-the-same-basket

Her argument is that national super is an entitlement. A view shared by many on this thread. The article seems to ramble a bit so can someone clarify why she is of the view that it is an entitlement for all over 65yrs. Not the "I've paid tax all my life" chestnut. There hasn't been a fund built up over years of govt deficits, gareth morgan describes it as a Vaucous argument and goes on to show why it is Vaucous. If we can get over the emotion maybe govts could have a realistic look at solutions. It is a bit like mentioning capital gains tax 7 or 8 years ago.

[winner69]

Even if really wishy washy well said Rosemary. She a good soul.

Taking money (the root of all evil anyway) out of the discussion just remind ourselves that one thing that has never really changed in society over the centuries is that the younger generations look after and take care of the old.

The challenge today for the younger generations is how that will continue to be, don't forget that one day you will be 'old'.

[Aaron]

Even if really wishy washy well said Rosemary. She a good soul.

Taking money (the root of all evil anyway) out of the discussion just remind ourselves that one thing that has never really changed in society over the centuries is that the younger generations look after and take care of the old.

The challenge today for the younger generations is how that will continue to be, don't forget that one day you will be 'old'.
No one is suggesting that we stop looking after old people in fact the argument is how to make it sustainable so we can keep looking after old people not just for the current generation but future generations as well.

here is the link to todays Gareth Morgan article. Look forward to the solution tomorrow.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11466733

[Bjauck]

No one is suggesting that we stop looking after old people ....
True...it is all about how we can continue to look after pensioners, especially the vulnerable, in the most effective way. However it has never been a one way street. As statistics show, the just about to retire and the recently retired have, on average, the most assets of any age group. While they may be income poor, they are more often asset rich. Traditionally asset rich grandparents have helped their families with deposits and bills. In places like Auckland it may be the only way for many to get deposits for housing. However the disparity in wealth is increasing across all age groups in contemporary NZ.

As an aside I read in the Guardian that because of their recession and despite cuts, Greek pensioners provide the main income in up to 45 to 50% of households there. They had a particularly generous pension system which their government is loath to change further, despite pressure from the EU and IMF.

[Beagle]

No one is suggesting that we stop looking after old people in fact the argument is how to make it sustainable so we can keep looking after old people not just for the current generation but future generations as well.

here is the link to todays Gareth Morgan article. Look forward to the solution tomorrow.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11466733

Morgan's credibility has really gone down the toilet with his eccentric campaigns against cat's and other eccentricities. He conveniently overlooks the family support system wherein we're paying young people including new immigrants to breed like rabbits and the moral responsibility of providing for one's own offspring is somehow completely irrelevant....go figure. These rampant breeders have often contributed little or nothing to the tax system in their 5 minutes of full time employment, if any. Just look at the incredibly serious social ands security problems they're having in England and France with the explosive growth of the Muslim population and to think we're supporting that with one of the most generous family support programmes in the world.

So many different angles and ways to peel this onion I'm getting dizzy so I think I'll leave it at that.

In conclusion, If people can't work out that at 65 you've earned the right to receive super by paying into the tax system for 50 years and that's what makes the difference compared to these Johnny come lately's who've barely contributed a red cent in their 5 minutes of contributions...honestly if people can't see there's a fundmental different then the cliché that readily springs to mind is "he gave them eyes but they will not see" I can't help blind people so won't bother trying anymore. I done with this.

[percy]

Even if really wishy washy well said Rosemary. She a good soul.

Taking money (the root of all evil anyway) out of the discussion just remind ourselves that one thing that has never really changed in society over the centuries is that the younger generations look after and take care of the old.

The challenge today for the younger generations is how that will continue to be, don't forget that one day you will be 'old'.

Again you are totally wrong.
The older our younger generation daughters get, the more they are costing us.!!!
"No,don"t give up work,you enjoy it , and what would you do all day?" both say/ask...!!! lol.

[winner69]

Again you are totally wrong.
The older our younger generation daughters get, the more they are costing us.!!!
"No,don"t give up work,you enjoy it , and what would you do all day?" both say/ask...!!! lol.

I agree Percy, children do seem to be and endless expense don't they. Like you I thought when they left home that's it. Lost track of how many cars Mum seems to have bought for them (always to be repaid I am told) and all that sort of stuff.

I look at it this way ..... I not really old yet .....but hope that when I am that enervation will look after us just as we looked after the oldies as well as the young uns. Maybe an investment in the future.

Do you part own any property with your kids or did you just give them the money?

[percy]

I agree Percy, children do seem to be and endless expense don't they. Like you I thought when they left home that's it. Lost track of how many cars Mum seems to have bought for them (always to be repaid I am told) and all that sort of stuff.

I look at it this way ..... I not really old yet .....but hope that when I am that enervation will look after us just as we looked after the oldies as well as the young uns. Maybe an investment in the future.

Do you part own any property with your kids or did you just give them the money?

Just give them the money.No loans,no interest,no family trusts.!!!.

[Beagle]

Just give them the money.No loans,no interest,no family trusts.!!!.

There are very sound and prudent reasons for the use of family trusts for example if your daughter meets a ratbag and they shack up together for 3 years and then he leaves he gets half what you've given your daughter as well as half her house.

[Aaron]

That was disappointing. No link yet but Gareth's suggestion to our problem was to stop old people voting or having some sort of competency test before being able to vote.(I may never vote again).
The important point in all of this is that no matter what I say on this site, it matters nought. We can have our say in the polling booth every three years and that is all that matters, in the words of Gareth Morgan.

"John Key, recognising that baby boomer votes were to remain a rich vein of electoral support until our large numbers started to die off, stopped that. Because of the intergenerational subsidy, Mr Key can count on our undying support until we are no more."

I would suggest we look to Greece as an example of what happens when you borrow for too long to pay "entitlements". If we see some pretty sad old Greeks on greatly reduced welfare on the news in the next few years keep in mind they had the good years and will only be reaping their rewards for their short sighted ways at the polling booth.

[winner69]

I part own a couple of properties I have 'funded'

Simple partnership agreement, main bit I get share of capital gains. Not fussed if they reneged on the interest/notional rent/outgoings bit - essentially it they pay the rates, insurance and maintain the place they get my part interest free.

The clever switched on one doesn't seem any point in repaying it, uses that money to buy investment properties.

If they don't like the arrangement no money I say. They soon come to their senses.

Dad still needs to mow the lawns and cut the hedge occasionally though.

[Bjauck]

Morgan's credibility has really gone down the toilet with his eccentric campaigns against cat's and other eccentricities.....
Even from the point of view of NZ's economy, Stephen Franks agrees with him...http://www.nbr.co.nz/opinion/gareth-right-lets-kill-all-cats
I think one of Gareth Morgan's points was that society's wealth includes its environment too and that Aotearoa NZ's unique fauna has always been at risk from introduced predators, including the domestic moggy cat. NZ's unique fauna is one of our attractions to overseas tourists too.

My parents' cat on their lifestyle property on the city fringe often kills piwakwaka, riroriro, tauhou and even kotare (despite those dangerous looking beaks)! Though it does kill quite a few rats. So on balance, that particular cat probably contributes more to the native fauna population!

[Bjauck]

...
The clever switched on one doesn't seem any point in repaying it, uses that money to buy investment properties....
As you say that is what clever people do in NZ. They buy investment properties. The tax regime means that is the way to get good returns without paying much tax and bankers fall over themselves to lend money to property investors at good rates. Hence that is why house prices are so high in relation to our incomes as financially successful people in NZ see property as the way to grow their wealth - to a greater extent than investing in shares, businesses and other productive assets. A reason too for our stock market being comparatively small for the size of our economy?

[winner69]

Silly question bjauck - say if I buy 100,000 Fletcher Building shares from you is that investing in 'productive' assets? ....considering that Fletchers won't be getting that money.

I can see how putting cash into a business that uses that cash to make things is 'productive' but just buying shares in an existing business I don't get it

[Bjauck]

When you buy from someone else a parcel of shares, you own part of a productive business. If shares were a preferred investment and a greater proportion of NZers wealth were in shares (with a corresponding higher price and lower yield) then more corporate money for productive expansion could be raised via rights issues for expansion domestically and overseas. Similarly well capitalised and valued NZ companies may be more likely to be the ones buying and setting up business overseas, as opposed to being the take over targets.

It would be great if the ever higher amounts of money going into the Auckland property market was going into new houses...but most of it is just going into boosting the price of land.

[Beagle]

I part own a couple of properties I have 'funded'

Simple partnership agreement, main bit I get share of capital gains. Not fussed if they reneged on the interest/notional rent/outgoings bit - essentially it they pay the rates, insurance and maintain the place they get my part interest free.

The clever switched on one doesn't seem any point in repaying it, uses that money to buy investment properties.

If they don't like the arrangement no money I say. They soon come to their senses.

Dad still needs to mow the lawns and cut the hedge occasionally though.

So this is what I have to look forward too in my retirement....Hmmm.

[winner69]

So this is what I have to look forward too in my retirement....Hmmm.


It never stops Roger.

That's why we deserve that 'entitlement' no matter what our means our.

Hopefully if I ever need the kids to look after me they will.

[percy]

So this is what I have to look forward too in my retirement....Hmmm.

Always remember its the kids who decide which home you go into.!!
Ones in Invercargill come a little cheaper.!!!!!!!!!!!!! lol.

[dingoNZ]

742374257424

Well that's bloody depressing, whats the underlying causes(s) or ours being significantly lower? Poor savers? Lower wages? A populous who are somewhat scared of equity markets?

[Bjauck]

Well that's bloody depressing, whats the underlying causes(s) or ours being significantly lower? Poor savers? Lower wages? A populous who are somewhat scared of equity markets?

A bit of all you said. Plus:
In NZ relative to income, housing wealth is high and financial wealth low. It's what happens when you have comparatively wealthy large number of immigrants buying houses, no control on foreign buyers of housing and little tax levied on investor housing. Investor rental housing becomes relatively more attractive than shares and fixed interest for the wealthy. Then the ordinary resident has to fork out a big chunk of their income just to buy an ordinary roof over their head. So precious little is left over for investment in financial assets. Add to that the lack of a nationwide contributory superannuation scheme with even half-hearted tax exemptions/credits until recently, then we can see NZ did not and still does not have an environment that encourages financial investment as opposed to investment in housing.

[Beagle]

It never stops Roger.

That's why we deserve that 'entitlement' no matter what our means our.

Hopefully if I ever need the kids to look after me they will.

Yes its a worry that the little chicks keep coming back to the nest for yet another feed even in their thirties by the sound of it :eek2:
When I was a younger man I thought that when they turned 21 you're job was done. Ignorance was bliss.
After last summer's wake up call I can see the job of supporting your kids is never done completely...really its an entire life's work.
Now you and Percy can see why I like dogs so much...they give so much unconditional love and ask for so little in return...I'd even venture so far as to suggest they're the ultimate investment :)

Percy mate I think one of my kids would be happy for us in due course to be in a home for the bewildered on Falkland Islands !

[Aaron]

This study was in the US. They haven't worked out why there is a difference in wealth between generations.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11490018

Stanley Druckenmiller worked it all out back in 2013.

https://www.youtube.com/watch?v=3PJO09fPT1Q

I wonder how this compares to NZ. Boomers should be angry at the silent generation and Gen X angry at boomers. Can we keep screwing over the next generation and the yet to be born.

[winner69]

for you aaron .... you don't need a million or so

http://www.smh.com.au/business/banking-and-finance/milliondollar-super-targets-labelled-scare-campaign-20150731-gip1d4.html

[Aaron]

So half a million and a mortgage free house for a comfortable retirement - Yeah Right.
Well maybe... to be honest it doesn't take much to survive, a good chunk of the world lives on less than a dollar a day.
My problem is that I am just not convinced the current untested (income and asset) national super scheme is affordable. Current govt books say we are running a deficit(debt) that future generations will have to repay and a large chunk of spending is national super. I am also sure future generations won't receive as generous a scheme if changes aren't made now. Just like how the younger generation got shafted in regard to a free tertiary education. If you don't need a hand out you shouldn't get it.

Winner did you look at the youtube clip from Druckenmiller, wouldn't mind betting this is true of NZ but I don't have the facts.

[Aaron]

RBA is recognising inter-generational wealth transfer(theft) through house prices.

http://www.smh.com.au/business/the-economy/reserve-bank-warns-high-property-prices-are-encouraging-huge-transfer-of-wealth-from-younger-to-older-generations-20150812-gixong.html

At least Aussies are smart enough to means test Superannuation. While in NZ wealthy superannuitants continue to plunder the public purse for their entitlement while the govt runs a deficit for future generations to repay.

[skeet]

I find the how much to retire on question a very interesting one, esp how to forecast what I would need once I retire.

My Parents have just retired, Dad in his mid 70's, mum just turned 65. Sold up the family home in Christchurch and bought a new house in Oxford. Morgage free house worth $550k, and $500k in the bank. There only income now is super x2, small amount of dividends payments and interest on bank deposits.

I would think that, yes this enough now, but I would think once I retire, disposable cash will be even more important.

[winner69]

RBA is recognising inter-generational wealth transfer(theft) through house prices.

http://www.smh.com.au/business/the-economy/reserve-bank-warns-high-property-prices-are-encouraging-huge-transfer-of-wealth-from-younger-to-older-generations-20150812-gixong.html

At least Aussies are smart enough to means test Superannuation. While in NZ wealthy superannuitants continue to plunder the public purse for their entitlement while the govt runs a deficit for future generations to repay.

Now come on Aaron, cool it. Calling me a plunderer hurts my feelings

Your and future generations will work out a way.

Get over it

[macduffy]

I find the how much to retire on question a very interesting one, esp how to forecast what I would need once I retire.

My Parents have just retired, Dad in his mid 70's, mum just turned 65. Sold up the family home in Christchurch and bought a new house in Oxford. Morgage free house worth $550k, and $500k in the bank. There only income now is super x2, small amount of dividends payments and interest on bank deposits.

I would think that, yes this enough now, but I would think once I retire, disposable cash will be even more important.

It depends very much on what one would want to spend it on, after providing for what one needs to spend. Potential inflation is the big bogey but at present rates of interest the income from $500k would be a bare minimum - for me. Spells out the importance of keeping a chunk of capital in growth (equity) assets as well as cash in the bank, IMO.

[Aaron]

Now come on Aaron, cool it. Calling me a plunderer hurts my feelings

Your and future generations will work out a way.

Get over it

Dear Winner69
I appreciate you noticed my use of emotive language with the word “plunder” rather than the much less emotive “take” or “receive”. I am thinking of a move into mainstream journalism/infotainment.
I can then become a prophet for the younger generations waking them up to the unfairness to what is going on with NZ Super as I am starting to think that the sharetrader website could be the single worst place to try and promote this issue based on the assumed demographics on this site.
I noticed Labour's proposal to raise the retirement age only kicks in in 2030. Do the numbers that is only one year after the last baby boomer retires. They are not even trying to disguise that this is an intergenerational rip-off.

[Aaron]

I might just crack the $500K (not adjusted for inflation) plus a mortgage free(but s***ty) house as long as I continue being miserable. This is just so I won't have to rely on everyone else when I retire.
Although if the next massive bust is underway I might profit better than I did in 2007-2009. Could make a big difference, then I don't have to worry about the public purse so much as I won't be needing anything from it.

[Beagle]

It never stops Roger.

That's why we deserve that 'entitlement' no matter what our means our.

Hopefully if I ever need the kids to look after me they will.

Don't think I could realistically count on mine if their current I want everything now and completely self obsessed and selfish approach to life is anything to judge their future actions by.

[rayonline]

As in per person. Been thinking about this. Myself as one of the many that does the daily grind with a rather generic office occupation. As I don't have a high standard of living, $500k could be enough, at a 7% provides $35k after tax (capital as there are none to the common household investor) and some dividends and interest from the bank and super if that remains. Jobwise to get $35k net requires about $60k gross salary.

But .. I have thought about break this and early retire LOL and do my own stuff. ..

[Harvey Specter]

at a 7% provides $35k after tax Is 7% realistic given you have to be reasonably low risk to ensure you dont lose capital. Ironically, the more capital you have, the more risk you can take as you aren't as dependant on maintain the capital to maintain the income.


I have found that an attitude change towards money and what you think you "need" will dictate your ability to retire early. The biggest issue with early retirement, from what I can see, is what do you do with your time, and more specifically how much does that cost. If your hobby cost money and you increase it from 2 days a week to 7 days a week, that requires an increase in income. In some ways, having a job stops you from spending money!

[JBmurc]

Personal I plan to retire from my labour intensive job once we have a Debt free home and passive net income of $500pw ... but of course I will just replace my labour intensive job with a more lifestyle friendly job and in turn focus more on my sharetrading ... I don't ever plan to retire completely ..
Goal is before my 40th ... only few more years to go ,..

[JBmurc]

Personal I plan to retire from my labour intensive job once we have a Debt free home and passive net income of $500pw ... but of course I will just replace my labour intensive job with a more lifestyle friendly job and in turn focus more on my sharetrading ... I don't ever plan to retire completely ..
Goal is before my 40th ... only few more years to go ,..

[h2so4]

Is 7% realistic given you have to be reasonably low risk to ensure you dont lose capital. Ironically, the more capital you have, the more risk you can take as you aren't as dependant on maintain the capital to maintain the income.

The biggest issue with early retirement, from what I can see, is what do you do with your time, and more specifically how much does that cost. If your hobby cost money and you increase it from 2 days a week to 7 days a week, that requires an increase in income. In some ways, having a job stops you from spending money!

I'd be looking for a secondary hobby that generated an income to support my full time hobby but I wouldn't have a J.O.B.

[Beagle]

Is 7% realistic given you have to be reasonably low risk to ensure you dont lose capital. Ironically, the more capital you have, the more risk you can take as you aren't as dependant on maintain the capital to maintain the income.

The biggest issue with early retirement, from what I can see, is what do you do with your time, and more specifically how much does that cost. If your hobby cost money and you increase it from 2 days a week to 7 days a week, that requires an increase in income. In some ways, having a job stops you from spending money!

Yep, That's very true. I plan to enjoy boating a LOT when I retire so I'd better re-work my numbers...

[h2so4]

Yep, That's very true. I plan to enjoy boating a LOT when I retire so I'd better re-work my numbers...

Aye aye captain :)

[BeeBop]

I retired at 40 yrs old once I had a passive income of 40k. Got husband working though and managed to grow our capital significantly over the 5 yrs since retiring...helped somewhat by the market's timing...bought in the dip of 2010 and managed to catch the recovery. Interestingly, despite a good salary whilst working, I have added more value per year than when on salary...but my hobby is real life monopoly!

[smpl]

Using an annualized average of 15 years of my investment returns - it is reasonable to assume that I can get an passive income of 40k per year from my portfolio going forward. Several years of tax work says that it costs me 24k per year to live a good quality of life in New Zealand (good food, utilities, transport, clothes, fun stuff, living conservatively). Although I do live rent free with a home and income - ie rent pays for the mortgage. I spend an additional 6k per year on 'unnecessary' things ie eating out, alcohol, holidays, personal expressions through commercial expenditure. After taking into account i) inflation ii) tax iii) mortgage repayments iv) savings for retirement and v) future savings and expenditure for family, then I have a decent amount of residual income remaining, especially if I cut my expenditure a little bit...

I am 30 years old and began to question the value of accumulating wealth just for myself. Research into the components of fulfilling work revealed that meaning is by far far the most significant factor. So I think I can and make a real difference over the rest of my life then I should apply the Principles of Compound Interest (ie 1. start young 2. give often) to Making A Difference in my career. See charities recommend by GiveWell and The Life You Can Save.

What do you think?

[BeeBop]

Using an annualized average of 15 years of my investment returns - it is reasonable to assume that I can get an passive income of 40k per year from my portfolio going forward. Several years of tax work says that it costs me 24k per year to live a good quality of life in New Zealand (good food, utilities, transport, clothes, fun stuff, living conservatively). Although I do live rent free with a home and income - ie rent pays for the mortgage. I spend an additional 6k per year on 'unnecessary' things ie eating out, alcohol, holidays, personal expressions through commercial expenditure. After taking into account i) inflation ii) tax iii) mortgage repayments iv) savings for retirement and v) future savings and expenditure for family, then I have a decent amount of residual income remaining, especially if I cut my expenditure a little bit...

I am 30 years old and began to question the value of accumulating wealth just for myself. Research into the components of fulfilling work revealed that meaning is by far far the most significant factor. So I think I can and make a real difference over the rest of my life then I should apply the Principles of Compound Interest (ie 1. start young 2. give often) to Making A Difference in my career. See charities recommend by GiveWell and The Life You Can Save.

What do you think?

When you "retire", along with managing your own family/life (which also keeps costs down), I can assure you that you can also give a lot of time: there are many organisations that really really appreciate human time as opposed to just cash donations. Schools for reading recovery support, Scouts/Guiding, animal rescue, rural volunteer services naming just a tiny drop. We have a regular donation programme going plus I contribute in time to three different organisations (although, I do have to restrict the time I can give otherwise I would be pulled in three different directions).

[smpl]

For all practical purposes I have already retired. Good point on how managing your own family/lift keeps costs down and I think the way you spend your time is very admirable. The cause that I am exploring at the moment argues that our money (and time) gets the most bang for buck helping the poorest billion (ie living on less than $1 per day) - a group that we do not have in New Zealand.

[Aaron]

here is a good article on the issue.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11542103

[Aaron]

Not a very informative article but interesting that the next generation working longer for less, is a given. Why do young people just accept this.

http://money.cnn.com/2015/12/02/news/economy/retirement-pensions-oecd/index.html

[Yoda]

It may have already been said but, the sicker you are, the less important money is to you would you prefer good health and less money, or more money and poor health
Investment in health is just as important that financial investment, after all , what's the point of having buckets of money if you cant spend it, unless you want to leave it for the next generation family . My goal is to live long and prosper, but leave an inheritance for my kids and grandkids, non of whom are on the property ladder in spite of having good jobs.
It seems silly to plan for living till your 80 -90 , thinking that modern medicine will get us there, when we just eat so much sugar, end up with type 3 diabetes, Alzheimer's dementia, and can,t remember where we put the money .. :-)
Grossly overweight, die at 60ish
unfit, smoke, ( latest fad... eating to much red meat causes cancer .. really ?)
spray grass weed killer in bare feet..... die early

I have read that the 'rich' give away 10% of profits, (and I don't mean the religious kind,) And I think there is a lot in that.
I love giving. My 4 yr old granddaughter has leukaemia and giving her an iPad for Christmas( for the 6 hr clinic appointments and hospital stays), from investment profits was awesome.

probably more like a Facebook post than trader .......oh well, Happy new year to you all and good luck in the 2016 comp.

[Lewylewylewy]

I think there's some wisdom in that post, Yoda.

I often grapple with concepts of saving now vs living now, and the idea that I won't live as long as trends suggest is something that has crossed my mind before. For example, expectations that we will live longer than our parents, who will live longer than our grandparents, based on data we have on the longevity of our grandparents and great grandparents is silly. Statistics on older generations living longer are due to healthy diets (no NZE:RBD back in those days and it was sunday dinners and veggies every day) and a leap in medicine. I don't think we've had another such leap in medicine and livestyles are much worse (drugs are commonplace, diets comprise of fast food and carbs with very few veggies and fruit).

Regarding saving now vs living now... If you work out how much you'd need to save each year to attain retirement at 65, without a pension... I think most people wouldn't be able to. I even consider myself a pauper with a $100k salary (ok, the situation would be different if I had a spouse on the same salary), when I consider my retirement goals.

But to give my idea of how much you need to retire, I say work out your daily costs. Break these into need vs want.

Need:
house tax money: $60pw = about $10 per day
Assume you've paid your house off, otherwise include rent / mortgage interest payments per day
health insurance = $5 per day
Food per day = $20
$10 per day saved to cover other costs, like insurance on house or repairs to.. I dunno, the car, say, or xmas presents, etc...

Want:
Petrol to go places = $10 per day
To eat out at a café each day = $10 extra on food costs
some activity = $10 per day
$10 per day savings towards an annual holiday

So, I need $45 per day and want an extra $40 a day to do stuff.

Therefore I break my investments into ones that would return almost guaranteed income that is inflation protected (because I don't want to have to guess how long it will take for me to expire and I'd like to leave something for kids one day, if I have any), such as a rental property or maybe p2p (still unsure of the place of p2p in my retirement plans). Using property, I recon you'd need 2/3 rentals to cover this and your costs of the rentals + tax, etc. And the need stuff, I can put into high risk high returns investments (shares or p2p, for example).

That's roughly how I'm planning my retirement. Currently I've just hit age 34 and I've got two good sized houses ($500k-$650k each) and about ready to buy my 3rd. I'll probably use p2p lending to bridge the grey area between need and want. I'm still grappling with how I will attain the want money and pay off the houses (i.e. do I buy another house and sell it to pay off the others or do I go 100% shares now and become a long term investor, topping up every few year or borrow against the house to buy long term shares and use annual savings to pay off the mortgages or should I use p2p in some way, such as putting share dividends into that rather than reinvesting?) it's an ongoing, fluid plan... :)

Anyway, I'm just yakking now, so I'll shut up. Hopefully someone finds something useful in that wall of text :)

[fungus pudding]

I think there's some wisdom in that post, Yoda.

I often grapple with concepts of saving now vs living now, and the idea that I won't live as long as trends suggest is something that has crossed my mind before. For example, expectations that we will live longer than our parents, who will live longer than our grandparents, based on data we have on the longevity of our grandparents and great grandparents is silly. Statistics on older generations living longer are due to healthy diets (no NZE:RBD back in those days and it was sunday dinners and veggies every day) and a leap in medicine. I don't think we've had another such leap in medicine and livestyles are much worse (drugs are commonplace, diets comprise of fast food and carbs with very few veggies and fruit).

Regarding saving now vs living now... If you work out how much you'd need to save each year to attain retirement at 65, without a pension... I think most people wouldn't be able to. I even consider myself a pauper with a $100k salary (ok, the situation would be different if I had a spouse on the same salary), when I consider my retirement goals.

But to give my idea of how much you need to retire, I say work out your daily costs. Break these into need vs want.

Need:
house tax money: $60pw = about $10 per day
Assume you've paid your house off, otherwise include rent / mortgage interest payments per day
health insurance = $5 per day
Food per day = $20
$10 per day saved to cover other costs, like insurance on house or repairs to.. I dunno, the car, say, or xmas presents, etc...

Want:
Petrol to go places = $10 per day
To eat out at a café each day = $10 extra on food costs
some activity = $10 per day
$10 per day savings towards an annual holiday

So, I need $45 per day and want an extra $40 a day to do stuff.



Could I suggest you make a computerised spreadsheet and enter all fixed and known costs on monthly basis. e.g. phone, electricity, rates, insurance - car, house and contents, subscriptions e.g. sky,
Of course enter all income - monthly basis.
Then estimate the extra and variable expenses such as grocery, tax, car running, holidays, personal expenses such as clothes, entertainment etc: Enter all expenses and income in the month you receive or pay them. The object is to get it lining up with your monthly bank statement.
Do this and adjust/monitor it for a couple of years and you'll find out what it does cost to live. The spreadsheet is of enormous value as when you have entered right data it's so easy to look and see your bank balance at any future date - a month, a year five years or more.
Monitor it and adjust as you go and until it's right or as near as possible.
I've done it for the last few years and it becomes a way of life.
Congratulations for thinking about your future retirement before you get there! You're taking the right steps.

[Lewylewylewy]

Could I suggest you make a computerised spreadsheet and enter all fixed and known costs on monthly basis. e.g. phone, electricity, rates, insurance - car, house and contents, subscriptions e.g. sky,
Of course enter all income - monthly basis.
Then estimate the extra and variable expenses such as grocery, tax, car running, holidays, personal expenses such as clothes, entertainment etc: Enter all expenses and income in the month you receive or pay them. The object is to get it lining up with your monthly bank statement.
Do this and adjust/monitor it for a couple of years and you'll find out what it does cost to live. The spreadsheet is of enormous value as when you have entered right data it's so easy to look and see your bank balance at any future date - a month, a year five years or more.
Monitor it and adjust as you go and until it's right or as near as possible.
I've done it for the last few years and it becomes a way of life.
Congratulations for thinking about your future retirement before you get there! You're taking the right steps.

That sounds smart. Also try to factor in costs that change when you retire. for example - health bills go up, fuel to get to work goes down, leisure costs go up as you have more time, etc...

Also, I think it's very significant to think about how you're going to deal with inflation and investment risk.

[smpl]

"If you can get 25 times your annual spending saved up and working for you, that is enough to live off – forever."

http://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/

"As it turns out, spending much less than you earn is the way to get rich."

[fungus pudding]

"As it turns out, spending much less than you earn is the way to get rich."

The Fungus motto. 'Learn to live beneath your means'.

[Yoda]

For those who struggle to live within their means, ie spend more than you earn, i mightsuggest a CAP COURSE. Dont be put off by the name. A simple course with an on line help for ins and outs of budgeting. I found it useful. Its interesting that there are lots of accountants that are not financially savvy. They count other peoples money but cant control their own.
http://www.capnz.org/in+debt/CAP+Money+Course.html

[mlt322]

Don't think I could realistically count on mine if their current I want everything now and completely self obsessed and selfish approach to life is anything to judge their future actions by.

Couldn't agree more. Spend it all enjoying the fruits of a lifetime's work while you can. They can learn to stand on their own two feet like we, and the generations before us, did.

[Bjauck]

Using an annualized average of 15 years of my investment returns - it is reasonable to assume that I can get an passive income of 40k per year from my portfolio going forward. Several years of tax work says that it costs me 24k per year to live a good quality of life in New Zealand (good food, utilities, transport, clothes, fun stuff, living conservatively). Although I do live rent free with a home and income - ie rent pays for the mortgage...

The 24k per year presumably does not include accommodation and is after income tax?

I think these exercises on calculating expenses and income in retirement should include accommodation costs and imputed income from owner-occupied housing. More people are no longer able to afford their own homes and some chose not to own, despite the tax advantages of owner occupied housing.

Likewise I think you should include the imputed income of your owner occupied housing (less applicable mortgage and ownership costs) in calculating your retirement income. If you own expensive and highly rentable property, your imputed income would be high. The property could always be switched for financial investments (and financial investment income) plus a downsized property (and its lower imputed accommodation income) in retirement.

As imputed owner-occupied property income is not taxed, it should be grossed up when calculating projected retirement income if gross income is being used when making calculations.

If the 24k does not include housing and is after tax, I estimate 20k would be needed for average rent in Auckland. So for a single retiree this would translate to approximately 60k gross income requirement.

[Aaron]

What is Diane Maxwell suggesting in this article? That NZ Super is unaffordable? John Key assured us it was affordable and he is a nice guy so was he lying? Surely not.

http://www.stuff.co.nz/business/opinion-analysis/87911259/diane-maxwell-politics-is-downstream-from-culture

Just when you think Diane is being traitorous to her baby boomer generation (the greedies) her suggestion is to push the retirement age up to 67 by 2034. Do the maths the last baby boomer retires in 2029. Why doesn't she suggest that after 2034 people not already on NZ Super will have to fund their own retirement with limited Govt. assistance much like they did after the last baby boomer graduated from University. Tertiary education then became unaffordable.

I bet lots of boomers will vote for a National govt tax cut next year rather than contributions to the Cullen fund to help us through the bulge. F**king greedy boomers make me want to puke.

Hope this doesn't come across too strong for those born between 1946 and 1964 but come on give the next generation a chance.

Sorry just realized this should really be in the off market discussion section, it is just that I discussed the retirement issue earlier in this thread so I used it.

p.s. some of my best friends are baby boomers.

[winner69]

Calm down Aaron

You can't take away my entitlement - and I'm not being 'F**king greedy'


Anyway most of that entitement of mine goes back into the government coffers along with heaps of ither taxes I pay - orobably to support the whingers of your generational cohort eh. Should that make me puke?

[Aaron]

The only "entitlement" is your mentality. If you are paying a lot of tax you must be earning a lot of income? What about NZ Super only being provided to those in need like all other welfare?

Am I whinging? More just getting angry at people(a whole lot of people, in fact an entire generation) and views I don't consider reasonable.

[winner69]

The only "entitlement" is your mentality. If you are paying a lot of tax you must be earning a lot of income? What about NZ Super only being provided to those in need like all other welfare?

Am I whinging? More just getting angry at people(a whole lot of people, in fact an entire generation) and views I don't consider reasonable.

I think life was tougher for my generation in the 60's /70's than it is for the same age group today - OK let's be conciliatory and say just as tough!

It's not really my fault many of my generation are 'accidental milionaires' as a result of a few housing booms ( and exhuberant share markets)

If anything its been a mis-allocation of resources by a succession of governments that have got us into this 'mess'

[Aaron]

I don't have a problem with millionaries and people who have done well for themselves and climbed the ladder of success. It is just when they knock out the rungs on the ladder after they have climbed it that I get annoyed.
-For example tertiary education need I say more.
-Also currently unaffordable housing you would have been able to buy at 3 to 4 times your annual income rather than 7 to 8 times, (the reasons for the increase in the housing boom are many and varied I would propose the following,1/ low interest rates and easy money as well as inflation, 2/immigration (foreign buyers can afford boomer houses and why would you accept less for your house from young NZers), 3/baby boomers realizing that although generous, NZ Super isn't enough to live on so with memories of Oct 1987 and recent finance company collapses the good old rental is really the only safe option and world central banks policy is designed to ensure it succeeds.
-In spite of John Key's assurances most people with half a brain know NZ Super is not sustainable we are just now seeing from Diane Maxwell how the next generation will need to adjust their expectations and save hard for the future as well as pay higher taxes in their best earning years to sustain the current boomer cradle to grave gravy train.
- Also you can't blame previous govts. they were voted in by a majority of the population. the last election was a good example. Labour proposed a capital gains tax, compulsory retirement savings, and raising the age of retirement to 67. National proposed changing the flag. Labour has never recovered from proposing what I thought were pretty good policies to address approaching problems.

[artemis]

......... Also currently unaffordable housing you would have been able to buy at 3 to 4 times your annual income rather than 7 to 8 times ...........

You've bought right in to the media driven narrative which seems to be based on averages and Auckland.

Whereas the median house price (November 2016 sales) for NZ is $520,000. This means half of sales were under $520,000. In some areas the median is a lot lower. Like Manawatu - median $270,000.

And whose annual income? The individual's? The household's? They can be very very different.

[Aaron]

You've bought right in to the media driven narrative which seems to be based on averages and Auckland.

Whereas the median house price (November 2016 sales) for NZ is $520,000. This means half of sales were under $520,000. In some areas the median is a lot lower. Like Manawatu - median $270,000.

And whose annual income? The individual's? The household's? They can be very very different.

True Auckland house price inflation is exceptionally high and I would hope that we will get a dip at some stage as has happened in the past and those people who have saved something will get a chance. It is just frustrating that world central banks are keeping interest rates so low when we have runaway asset price inflation and I am not leveraged to the eyeballs. Here is what the RBNZ had to say in Jan 2016 regarding house prices.
http://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Bulletins/2016/2016jan79-1.pdf
Here is the first paragraph in the conclusion "New Zealand house prices have risen significantly over the past five decades. In real terms, house prices have more than tripled, with a strong upward trend since 1994. Nonetheless, there have been several instances where real house prices have fallen."

Here is a chart on inflation. haven't actually considered CPI inflation compared to house price inflation other than the CPI currently has no relationship to house prices.
http://www.rbnz.govt.nz/statistics/key-graphs/key-graph-inflation

Some other graphs on mortgage rates but they only go back to 1990 I know boomers like to bleat on about 20% interest rates back in the 70,s still up around 15% in the 1990s I would note. Anyway house prices is just one issue. Looking at all the earthworks around Auckland supply is being dealt with. We could address demand immediately by curbing immigration but maybe we need that as workers to retirees is set to reduce over the next couple of decades.

[Aaron]

And whose annual income? The individual's? The household's? They can be very very different.
call me old fashioned but I like the idea that a mother or father can stay home to bring up a family's kids (Note I said family please don't bring up the DBP issue). Although I think the main burden for the kids should be placed on the parents we are all paying for other people's parent's retirements and not complaining why can't we pay for tertiary education for NZ's young people as well as they are the future of this country. Maybe well off retirees shouldn't receive NZ Super? That is where Labour's compulsory Kiwisaver idea made sense. Even a bludger is forced to put something aside for their retirement. If we accept taxation then compulsory retirement savings isn't that bad and it will benefit you or your family directly which is why everyone hates tax because it benefits all of society and you can't see any direct benefit for yourself. The only downside is that the funds management industry come across as not crooks necessarily but definitely well paid for the service they provide.

[winner69]

.........I know boomers like to bleat on about 20% interest rates back in the 70,s .........

No no Aaron - My first house the first mortgage was 22% with a second mortgage of 27.5% in the early 1970's. That house cost me $18.000 - a cruddy but cute stucco house with a flat malthoid roof - still standing but has been reroofed and looks rather nice these days (probably says something about the better building standards those days eh)

I didn't complain because that's what one paid those days and repayments were a huge part of the weekly income - couldn't afford a car and even had to rent a TV - but life was fun anyway

Talking of baby boomers and retirement - I have always been extremely grateful to a dear old lady who told me when I first started working to put 5% of my pay into a subsidised company super fund. Never missed by 5% but along with the company contributions and it being a defined benefit scheme the final pay out was heaps

Pity more NZers never joined a super fund and there was no alternative like Kiwisaver until recently. Pity compulsory super was scrapped in 1975, might have made made things easier now.

Some cynics say that low interest rates these days is god's way of 'punishing' the boomers - they need to spend it to survive because term deposit rates don't give them enough cash to live (and let alone pay the council rates on the stupidly highly inflated property they own)

Don't let it get you down Aaron - you'll be OK and live a prosperous live

[fungus pudding]

(and let alone pay the council rates on the stupidly highly inflated property they own)



The council rates are struck by the costs the council incurs or budget to incur, so values only play a part as far as relativity is concerned. IOW it's a way of dividing the costs between ratepayers. So even if you think properties are 'stupidly inflated' it has no effect on the rates. That's a long held misconception that should be buried a long way from a forum like this.

[Raz]

What is Diane Maxwell suggesting in this article? That NZ Super is unaffordable? John Key assured us it was affordable and he is a nice guy so was he lying? Surely not.

http://www.stuff.co.nz/business/opinion-analysis/87911259/diane-maxwell-politics-is-downstream-from-culture

Just when you think Diane is being traitorous to her baby boomer generation (the greedies) her suggestion is to push the retirement age up to 67 by 2034. Do the maths the last baby boomer retires in 2029. Why doesn't she suggest that after 2034 people not already on NZ Super will have to fund their own retirement with limited Govt. assistance much like they did after the last baby boomer graduated from University. Tertiary education then became unaffordable.

I bet lots of boomers will vote for a National govt tax cut next year rather than contributions to the Cullen fund to help us through the bulge. F**king greedy boomers make me want to puke.

Hope this doesn't come across too strong for those born between 1946 and 1964 but come on give the next generation a chance.

Sorry just realized this should really be in the off market discussion section, it is just that I discussed the retirement issue earlier in this thread so I used it.

p.s. some of my best friends are baby boomers.

She is just running a political agenda, if the tax take was more equitable, as an example whole sectors are set up for tax free capital gain in this country let alone the charities set up.. the tax take would easily cover the change in age from 65 to 67. Generation x onwards will be screwed. Many baby boomers are not wealthy and need the super however I have met a lot of the wealthy ones are generally greedy and selfish and don't need super. They are usually the ones running the place. A older set on this forum for sure so don't expect them to be able to relate.

[Raz]

I think life was tougher for my generation in the 60's /70's than it is for the same age group today - OK let's be conciliatory and say just as tough!

It's not really my fault many of my generation are 'accidental milionaires' as a result of a few housing booms ( and exhuberant share markets)

If anything its been a mis-allocation of resources by a succession of governments that have got us into this 'mess'

I would have to concede that those that benefited with the capital gains have certainly supported the status quo. My neighbours in Auckland support migration as their house prices go up believing they have made it and do not care one little bit for the consequences of others from this policy.

[fish]

I don't have a problem with millionaries and people who have done well for themselves and climbed the ladder of success. It is just when they knock out the rungs on the ladder after they have climbed it that I get annoyed.
-For example tertiary education need I say more.
-Also currently unaffordable housing you would have been able to buy at 3 to 4 times your annual income rather than 7 to 8 times, (the reasons for the increase in the housing boom are many and varied I would propose the following,1/ low interest rates and easy money as well as inflation, 2/immigration (foreign buyers can afford boomer houses and why would you accept less for your house from young NZers), 3/baby boomers realizing that although generous, NZ Super isn't enough to live on so with memories of Oct 1987 and recent finance company collapses the good old rental is really the only safe option and world central banks policy is designed to ensure it succeeds.
-In spite of John Key's assurances most people with half a brain know NZ Super is not sustainable we are just now seeing from Diane Maxwell how the next generation will need to adjust their expectations and save hard for the future as well as pay higher taxes in their best earning years to sustain the current boomer cradle to grave gravy train.
- Also you can't blame previous govts. they were voted in by a majority of the population. the last election was a good example. Labour proposed a capital gains tax, compulsory retirement savings, and raising the age of retirement to 67. National proposed changing the flag. Labour has never recovered from proposing what I thought were pretty good policies to address approaching problems.

Life just isnt fair-i would like it to be but cant ever see it happening under our current political system.
Your post isnt fair-times change.
As a baby boomer approaching super age I will feel no guilt receiving it even if I dont need it.
We paid very high taxes-up to 66%-with the expectation that this would fund our super.
Mortgage interest rates up to 20%.
Tertiary education was cheap-but still had to work in the holidays to fund it.
Now you have very generous student loans-no interest and small repayments.
Mortgage repayments on houses a lot less. a fraction
Clothes,cars,food,electrics,travel a lot less.
Just accept it as you are not going to change it.

[winner69]

Life just isnt fair-i would like it to be but cant ever see it happening under our current political system.
Your post isnt fair-times change.
As a baby boomer approaching super age I will feel no guilt receiving it even if I dont need it.
We paid very high taxes-up to 66%-with the expectation that this would fund our super.
Mortgage interest rates up to 20%.
Tertiary education was cheap-but still had to work in the holidays to fund it.
Now you have very generous student loans-no interest and small repayments.
Mortgage repayments on houses a lot less. a fraction
Clothes,cars,food,electrics,travel a lot less.
Just accept it as you are not going to change it.

Good ne fish. Wife applying for National Super so our entitlement goes up eh and we have a bit more for some more treats .... and when we catch the Days Bay Ferry we both go for free, Cool

Hope the likes of Aaron are putting up to 20% of their income aside for when they retire - they might need it

[fungus pudding]

Life just isnt fair-i would like it to be but cant ever see it happening under our current political system.
Your post isnt fair-times change.
As a baby boomer approaching super age I will feel no guilt receiving it even if I dont need it.
We paid very high taxes-up to 66%-with the expectation that this would fund our super.
Mortgage interest rates up to 20%.
Tertiary education was cheap-but still had to work in the holidays to fund it.


I'd point out that very few of us had tertiary education. It wasn't as easy to qualify as it is now, and universities were not geared up to handle the numbers they do today.
My secondary education was in the early 60s. There were 2 streams in the academic class , (don't know if they still grade that way) Now you have very generous student loans-no interest and small repayments.





Mortgage repayments on houses a lot less. a fraction
Clothes,cars,food,electrics,travel a lot less.
Just accept it as you are not going to change it totalling approximately 100 students. Perhaps about 6 or 8 went to varsity.

[Aaron]

Interest free student loans seem reasonable but not when compared to having all your course costs paid for and a small allowance for living expenses that the boomers enjoyed.
Tax rates were high but no tax money was put aside to fund nz superannuation all spent on other things. So this argument (which keeps cropping up) that "I have paid taxes all my life" has been described as vacuous and I would tend to agree. nz super will be funded by current and future taxpayers.
I also don't think we have to accept things the way they are but if you want change you need to stick your neck out and make an effort. I am probably currently comfortable enough not to want to put in the effort other than upsetting the boomers on sharetrader. maybe it will help prepare you if there is ever any backlash when tax rates go back up to 66% to cover health costs and nz super in the future and your feelings won't be as hurt if it happens.

Life will never be fair but that doesn't mean we should give up trying.

Currently trying to put a bit aside for retirement (probably not 20%)as I would feel bad putting my hand out for welfare if I don't need it. I am a bit sad that I have to forgo other things like, new cars, overseas holidays, boats and jet skis but I wouldn't expect others to fund these for me through an overly generous welfare system.

Stop winding me up winner69 I need to work long hours to pay enough taxes to fund your super as well as put some aside for my own.

[Aaron]

Sorry I should change the thread title to overly generous nz super.
http://www.interest.co.nz/opinion/85435/david-chaston-explores-how-migrants-and-older-workers-are-keeping-nz-super-sustainable
Older workers keeping nzsuper sustainable? Maybe more so if they weren't actually receiving it while they worked. I think aussie super is asset and means tested.

[RGR367]

Sorry I should change the thread title to overly generous nz super. ...............


No. Not generous enough. If it were so, many soon to be retiring baby boomers would not be investing and/or trading anymore. But worry not, you'll get old soon enough. Let us know by then if you still don't want your "retirement entitlement" (sic) when you get to that stage :p

[Aaron]

No. Not generous enough. If it were so, many soon to be retiring baby boomers would not be investing and/or trading anymore. But worry not, you'll get old soon enough. Let us know by then if you still don't want your "retirement entitlement" (sic) when you get to that stage :p
No ones going to turn it down and the people will vote in whichever party promises to keep it going so I guess Fish is right even though common sense would say you don't give welfare to those who don't need it, a self centered, greedy, bludging mindset of a majority of NZers will ensure this doesn't change. I don't begrudge NZ Super to people who need it.

[winner69]

No ones going to turn it down and the people will vote in whichever party promises to keep it going so I guess Fish is right even though common sense would say you don't give welfare to those who don't need it, a self centered, greedy, bludging mindset of a majority of NZers will ensure this doesn't change. I don't begrudge NZ Super to people who need it.

Stop winding me up Aaron (he says jokingly)

It's not welfare, it's an entitlement - a little reward for the contribution we have made in making this country what it is today

Was pay day yesterday - might shout myself to oysters and chips for lunch and have a picnic on the beach

[h2so4]

No ones going to turn it down and the people will vote in whichever party promises to keep it going so I guess Fish is right even though common sense would say you don't give welfare to those who don't need it, a self centered, greedy, bludging mindset of a majority of NZers.

They got nothin on you mate.
You need a fair kick up the ass.

[777]

They got nothin on you mate.
You need a fair kick up the ass.

About time that was said.

[couta1]

No ones going to turn it down and the people will vote in whichever party promises to keep it going so I guess Fish is right even though common sense would say you don't give welfare to those who don't need it, a self centered, greedy, bludging mindset of a majority of NZers will ensure this doesn't change. I don't begrudge NZ Super to people who need it. You mean the bludging mindset of career beneficiaries who after a long hard working life of sitting on their backsides then morph into deserved recipients of NZ Super.

[Beagle]

Sorry I should change the thread title to overly generous nz super.
http://www.interest.co.nz/opinion/85435/david-chaston-explores-how-migrants-and-older-workers-are-keeping-nz-super-sustainable
Older workers keeping nzsuper sustainable? Maybe more so if they weren't actually receiving it while they worked. I think aussie super is asset and means tested.

How many years have you been paying into the N.Z. tax system Aaron ? You think someone who's paid in for perhaps as much as 50 years isn't "entitled" to their super ?
Here's a great video...wonder what the puppies name is ? http://www.msn.com/en-nz/video/animals/husky-puppy-has-heated-debate-with-human/vi-BBy4S20?ocid=spartandhp

[Aaron]

They got nothin on you mate.
You need a fair kick up the ass.
What's your problem your listed as living in a country that has compulsory retirement savings and means testing for superannuation as well as a capital gains tax.

[h2so4]

What's your problem your listed as living in a country that has compulsory retirement savings and means testing for superannuation as well as a capital gains tax.

Oh I see you think you lost the ovarian lottery and think you should have been born on this side of the ditch.
You live in a rich successful nation.
The problems you keep alluding to are a result of that success.

[h2so4]

.....but of course you are right. It's not my problem.

[Aaron]

Oh I see you think you lost the ovarian lottery and think you should have been born on this side of the ditch.
You live in a rich successful nation.
The problems you keep alluding to are a result of that success.
Still not entirely sure what your issue is. I don't have a problem with NZ the country. I am suggesting that NZ Superannuation needs some adjustments now rather than later generations either having to pay a lot more tax to support it or receive a lot less than is currently being provided. My main issue is that it is universal and I think people who don't need a handout should not be getting one. My dig at a bludger mentality stems from the last elections where a party addressed these issues by proposing compulsory retirement savings and raising the age of entitlement. They were decimated at the elections I believe because the winning party said that nz super is affordable and they won't touch it. I think a lot of people have their heads in the sand on this issue. The latest govt surplus doesn't help my argument but that apparently has been at the expense of a lot of other areas where govt expenditure has been cut back or left at the same level.
I am also upset at the baby boomer generation because they have denied later generations the same opportunities they had such as free tertiary education and they seem happy to run the bank account down now with an overly generous nz super knowing that it will most likely be later generations that miss out again.
Why this would upset someone on the gold coast I don't know?

[Aaron]

IF any ass is going to be kicked on this forum then we are going to do it.
no need for any arse kicking. Looks like there might be supporters for this proposal though. I think you might find a lot of support from the ST crowd for this proposal if you ran a poll.
To be fair I use a bit of emotive language to get a response but hopefully my arguments aren't too unreasonable.

[h2so4]

You keep blaming the baby boomers .All these issues are budgeted by successive governments.
Are you looking for the sympathy vote?
You need a kick up the pants Aron.

[Aaron]

You keep blaming the baby boomers .All these issues are budgeted by successive governments.
Are you looking for the sympathy vote?
You need a kick up the pants Aron.
A bit unfair blaming the boomers I suppose, my reasoning for this though is that they are a large voting block and I don't think it is coincidental that free tertiary education ceased after the last boomer graduated and the issue of affordability of the current nz super will fall onto later generations. If you think that successive govts have budgeted for nz super so that it will continue in its current form you are misinformed at best, ignorant at worst.
Am I looking for sympathy? No just pointing out something I think is wrong. Why are you so upset, your in Australia? Your superannuation will be means tested, that is one thing I think would help here in NZ.
A kick up the pants seems a bit drastic but what else should we expect from the oil of vitriol.
Very violent solutions you propose glad I'm in NZ.

[fungus pudding]

A bit unfair blaming the boomers I suppose, my reasoning for this though is that they are a large voting block and I don't think it is coincidental that free tertiary education ceased after the last boomer graduated ............

As previously pointed out, the numbers attending university a few years back were insignificant compared to today. It wasn't easy to get in. They are still massively subsidised, and do end up on very good incomes if they take the right courses or enter the right profession.

[Beagle]

As previously pointed out, the numbers attending university a few years back were insignificant compared to today. It wasn't easy to get in. They are still massively subsidised, and do end up on very good incomes if they take the right courses or enter the right profession.

It was very difficult indeed to get in and very difficult to fund you living costs. Course fees themselves were ostensibly free but textbooks and living costs most definitely were not. Many students in the 1970's and 1980's like myself had to work part time during the year and full time in the holidays. I worked ten hour days, six days a week on my uncle's 5,000 acre farm for ten weeks in a row in the so called (for me), summer holidays in my late teens down in Gore Southland while my mates were out dating girls and having fun... backbreaking work some of it to pay my way through Uni) Students had to fund substantial parts of their costs to support themselves through Uni. A few years after I graduated and was earning good income I was paying the top tax rate which was 66%, (that is not a typo Aaron). As you can see, very few things in life are truly free. I repaid the course costs of my uni education with 66% taxation rates and considered myself lucky to get into Auckland uni in the first place, (it wasn't luck, actually it was extremely hard work at school).

These days its open to so many more people and they'll pay you an allowance for your accommodation costs as well so the availability of tertiary education is vastly more accessible than it was for my generation. Almost anyone has access to tens of thousands of dollars of interest free loans on the never never which don't become repayable until you hit a certain income threshold and are then repaid at 12% on income earned above about $20K.
The maximum tax rate you can now pay is 33% on income over $70,000 plus the student loan repayment of 12% so your maximum personal tax rate is 45%...mine was 66%, some 21% more.

It is disingenuous to suggest the baby boomer generation got their education for free. Course costs were effectively a loan scheme under a different guise and repayment rates were far stiffer through punitive top taxation rates of 66%. People had no option but to work hard to pay for their living costs and textbook costs as there was no cushy government funding scheme for them.

Aaron, you haven't answered my question earlier today. How many years have you been paying into the N.Z. tax system ?

[Raz]

Really the point should be who has made net contributed to the society regardless how long you have paid tax. I understand the social contract with super the problem is we have had more net takers than givers into the system. Now the greatest takers do not want to change the system to make it sustainable they just want to take it way from the next generation.

As an example many farmers through development expenditure in the past have paid limited income tax and then cash up with tax free with capital gains. That is not to say farming is easy life.

I can site many sectors and examples.

Rodgers comments are real however ignore his generation of accountants had deregulation to gain from and the job opportunities have been immense for that generation. Less than ten years later opportunities radically decreased and that has become more acute for the current generation.

I am under no illusion it is so much tougher for the current generation. Our parents cared about future generations and now it up to us to make the difference. This forum seems tends to suggest we are more concerned about ourselves and there lies the problem.

[winner69]

Aaron - one of the buggest cost for boomers over the years has been supporting their children (the future generations and probably about your age)

Parents dutifully paid university fees. i've lost track of the number of cars i've 'financed' and even now Mum seems sorry for them when 'I need a new hot water cylinder' etc etc etc etc.

Suppose thats called 'child support' not funded by the state .......or in a round about sort of way my 'entitlement' helping out Gen X and Gen Y ......ironic eh

[Aaron]

Aaron - one of the buggest cost for boomers over the years has been supporting their children (the future generations and probably about your age)

Parents dutifully paid university fees. i've lost track of the number of cars i've 'financed' and even now Mum seems sorry for them when 'I need a new hot water cylinder' etc etc etc etc.

Suppose thats called 'child support' not funded by the state .......or in a round about sort of way my 'entitlement' helping out Gen X and Gen Y ......ironic eh
You must think I am young. I am only just behind the last boomer. maybe that's why I feel more cheated than the kids of today. I am supporting two kids through university currently. Your kids are luckly they have you as a parent and mine are lucky they have the support and backing of their parents. Many other smart kids will be put off furthering their education due to the cost if they don't have the support of their parents creating a class society where only kids from wealthy families go to university and own their own home. Not the NZ I grew up in and I think it is a shame.

[Aaron]

Aaron, you haven't answered my question earlier today. How many years have you been paying into the N.Z. tax system ?
Dear Roger
I haven't answered because I assumed we would end up comparing who has contributed more to society over the years.
Also comparing going to Uni back in your day to what kids today have to pay today is weak. Students have always had to work in the holidays and part-time I am not saying it was easy back in your day but compared to todays students you had a walk in the park.
Anyway I have made this an intergenerational argument whereas I was hoping more to highlight issues that affect all NZers and making suggestions where govt might improve things. I'm sorry if anyone feels like it is a personal attack. It is only my opinion.
The worst thing you can do is ignore my posts as I find that most frustrating.

[fungus pudding]

Dear Roger
I haven't answered because I assumed we would end up comparing who has contributed more to society over the years.
Also comparing going to Uni back in your day to what kids today have to pay today is weak. Students have always had to work in the holidays and part-time I am not saying it was easy back in your day but compared to todays students you had a walk in the park.
Anyway I have made this an intergenerational argument whereas I was hoping more to highlight issues that affect all NZers and making suggestions where govt might improve things. I'm sorry if anyone feels like it is a personal attack. It is only my opinion.
The worst thing you can do is ignore my posts as I find that most frustrating.

Well I can tell you a little of things in 'my day'. Had the opportunity to gain university entrance, which was then a requirement to go to varsity - but I simply couldn't afford it. So in 1965 began an apprenticeship with a govt. department. It was a five year term with no recognition of extra hours worked, so overtime didn't count. So this is the worst bit - as an apprentice I was paid 17 shillings and 6d per week. ($1.75) A pittance. Once my apprenticeship was completed I went straight onto the tradesmans' rate of $ 22 per week. (Decimal currency kicked in in 1967.) Sounds low but it good for its time. But as an apprentice we got less than 10% of a full wage. (wages rose rapidly after that with a burst of high inflation - I can remember in 1974 first getting a pay of $100 per week - big money) Admittedly that was the govt. and private employers paid much better and credited overtime off apprenticeship. The govt. had their own rules. The good that came out of it was it made me ambitious to do better. Just one little illustration of 'the good old days' and how 'easy' we had it.
By the time I had worked myself into a good financial position I had the 'privilege' of paying 66% tax. Wasn't I lucky!

[winner69]

NZ once had a Universal Family Benefit which gave Mum some money every week to spend on her kids

I was miffed when they stopped it for us 6 weeks after our 1st child .......paid into something they called social security tax surcharge for no return.

[Beagle]

Dear Roger
I haven't answered because I assumed we would end up comparing who has contributed more to society over the years.
Also comparing going to Uni back in your day to what kids today have to pay today is weak. Students have always had to work in the holidays and part-time I am not saying it was easy back in your day but compared to todays students you had a walk in the park.
Anyway I have made this an intergenerational argument whereas I was hoping more to highlight issues that affect all NZers and making suggestions where govt might improve things. I'm sorry if anyone feels like it is a personal attack. It is only my opinion.
The worst thing you can do is ignore my posts as I find that most frustrating.

I don't think its a weak argument at all. Kids now have ready access to Uni and interest free loans that go on forever. Plenty of people cruising from one Uni course to another and simply don't care about the interest free debt they're racking up as they have no intention of repaying it... Others accept that with the 12% repayment rate their top personal tax rate will effectively be 45%, a lot lower than the 66% I was paying.
The point is in my day there was no student loan scheme. NO ability to borrow money whatsoever. I can remember being so poor I broke down crying because I couldn't afford a replacement set of brake pads for my $500 scooter to get to Uni ($8 was the cost, I simply didn't have it). You never forget things like that. Here's another good point. I was fortunate to have the support of my parents. They could only afford to support one of us through Uni. My three brothers missed out. These days parents wouldn't need to make harsh decisions like that about selecting only one of their brightest, all could afford to go because of the student loan scheme. You maintain the current generation are hard done by. My example suggests the complete opposite. The current generation have opportunities previous generations did not. Try telling my three brothers who couldn't afford to go to Uni that baby boomers were the blessed generation !

Anyway Aaron with the education debate we are digressing a long way off on a tangent to the central theme of this thread I started. May I suggestwe get back to the topic clearly stated in the thread title. I think the answer for someone who wants to live a modest but comfortable lifestyle, has a debt free home and is collecting the superannuation which they're entitled to collect because they've paid tax all their lives is $1m. Obviously if one wants to travel overseas regularly in retirement, drive fine European automobiles and own a fancy launch they'll need plenty more.

[Beagle]

Well I can tell you a little of things in 'my day'. Had the opportunity to gain university entrance, which was then a requirement to go to varsity - but I simply couldn't afford it. So in 1965 began an apprenticeship with a govt. department. It was a five year term with no recognition of extra hours worked, so overtime didn't count. So this is the worst bit - as an apprentice I was paid 17 shillings and 6d per week. ($1.75) A pittance. Once my apprenticeship was completed I went straight onto the tradesmans' rate of $ 22 per week. (Decimal currency kicked in in 1967.) Sounds low but it good for its time. But as an apprentice we got less than 10% of a full wage. Admittedly that was the govt. and private employers paid much better and credited overtime off apprenticeship. The govt. had their own rules. The good that came out of it was it made me ambitious to do better. Just one little illustration of 'the good old days' and how 'easy' we had it.
By the time I had worked myself into a good financial position I had the 'privilege' of paying 66% tax. Wasn't I lucky!

This is something the current generation simply don't understand and take the gift of many many years of interest free loans for granted and then still bleat that they have to repay the money ! Opps, digressing from the central theme of the thread again :blush: