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  1. #301
    Membaa
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    I think @Roger and @Vaygor1 you're saying that peoples' ability to 'retire' is dependent on their ability to pay for it in spite of inflation, which is self evident, albeit hard to do for most. However fewer and fewer people have that ability to comprehend it, or pay for it, even now, and that will get worse in an inflationary environment which is beginning now and going to get worse.

    The cognitive bias which is self evident on this thread is that everyone has saved or will save and invest enough to have a comfortable life after worthwhile employment, either directly or indirectly. That is so far from the truth of reality for the vast majority that it sets aside the discussion here to the elite who have little or no comprehension, involvement or appreciation of the real world or real people.

    That in itself doesn't mean the elite who have had the foresight and the ability to position effectively for retirement should be maligned in any way, it merely says that the conversation has devolved to a few elite who have had foresight and the ability to make this their difference. And live happily thereafter. God bless them.

    Perhaps this is part of the financial divide we are seeing in NZ, the widening of the gap between those who know and who have, and those who don't know and do not have?

  2. #302
    ShareTrader Legend Beagle's Avatar
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    Baa Baa - Have to agree to disagree with your point of view. http://www.kiwisaver.govt.nz/ In my opinion there's ample opportunity for people to plan to have something extra in their retirement and the safety net of where the current super is set does provide a modest standard of living for those who've made no provision for their retirement savings whatsoever.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  3. #303
    The past is practise. Vaygor1's Avatar
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    Very interesting, valid, and diverse points you all make Raz, BaaBaa, and Roger.
    I will think more about this cognitive bias you refer to BaaBaa which I find most interesting.

    I am in the midst of a spreadsheet that performs a sensitivity analysis of of the factors affecting retirement (including inflation) which I will post once I have tidied it up.

    Another important issue to take into account regarding retirement calcs is taxation. Does one assume the NZ tax burden increases or decreases (on average) over a 40-50 year timeframe. What does one do with WHT, deferred tax, imputation credits etc? Probably ignore them and treat Imputation credits as a cherry-on-the-cake.
    For PAYE alone I struggled to find any pre-prepared excel spreadsheet algorithm to give me PAYE adjustments under current tax laws... could really only find look-up tables of sorts... not that useful for a big automated spreadsheet.

    Anyway. I wrote my own and post them below to help those who might need them. It works for current NZ paye tax rates and ignores Kiwisaver, ACC, Student Loan repayments as all these things should not factor (I think) into retirement income.

    Copy/Paste the following into Excel Cell A2.
    Then enter into A1 your gross income and the net will appear in A2

    =IF(A1<=14000,A1*0.895,IF(AND(A1<=48000,A1>14000), ((A1-14000)*0.825)+12530,IF(AND(A1<=70000,A1>48000),((A 1-48000)*0.7)+40580,((A1-70000)*0.67)+55980))

    * For some reason there as a space between the 3rd to last 'A' and '1' above which I can't get rid of. This space needs to be removed after pasting into Excel

    Copy paste the following into Excel Cell B2.
    Then enter into B1 your net income and the gross will appear in B2

    =IF(B1<=12530,B1/0.895,IF(AND(B1<=40580,B1>12530),((B1-12530)/0.825)+14000,IF(AND(B1<=55980,B1>40580),((B1-40580)/0.7)+48000,((B1-55980)/0.67)+70000)))

    The above took a bit of thinking so I'm happy to share it. If anyone knows where these are available on the web somewhere, let me know.... and let me know if any errors in the above formulae are discovered.
    Last edited by Vaygor1; 20-01-2017 at 07:46 AM.

  4. #304
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    Quote Originally Posted by Roger View Post
    Baa Baa - Have to agree to disagree with your point of view. http://www.kiwisaver.govt.nz/ In my opinion there's ample opportunity for people to plan to have something extra in their retirement and the safety net of where the current super is set does provide a modest standard of living for those who've made no provision for their retirement savings whatsoever.
    I agree @Roger that there is ample time, though your hypothesis imho does not take into account those who don't or haven't (for whatever reason) taken advantage of that time, or those who cannot, or those who have suffered significant adverse financial events, or multiple adverse events.

    Those unfortunates of which there are many, could probably not afford your consultation advice anyway so it is not surprising perhaps that you may not have these types of clients or relate to their circumstances?

    The pathway to a comfortable life, after the ability to generate sustainable regular income by personal effort, is not always as smooth as the perfectly informed and acted upon scenario.

    I disagree that the national super is a viable backstop, as it barely covers groceries and staples, it assumes one has freehold accomodation, and confers the beneficiary upon the state in all capacities of need.

  5. #305
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    Quote Originally Posted by Baa_Baa View Post
    I agree @Roger that there is ample time, though your hypothesis imho does not take into account those who don't or haven't (for whatever reason) taken advantage of that time, or those who cannot, or those who have suffered significant adverse financial events, or multiple adverse events.

    Those unfortunates of which there are many, could probably not afford your consultation advice anyway so it is not surprising perhaps that you may not have these types of clients or relate to their circumstances?

    The pathway to a comfortable life, after the ability to generate sustainable regular income by personal effort, is not always as smooth as the perfectly informed and acted upon scenario.

    I disagree that the national super is a viable backstop, as it barely covers groceries and staples, it assumes one has freehold accomodation, and confers the beneficiary upon the state in all capacities of need.
    When I meet other chartered accountants and they talk this angle I think they should all have to take on a large non profit client and meet some of the working poor that keep these organisations ticking.

  6. #306
    ShareTrader Legend Beagle's Avatar
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    Quote Originally Posted by Baa_Baa View Post
    I agree @Roger that there is ample time, though your hypothesis imho does not take into account those who don't or haven't (for whatever reason) taken advantage of that time, or those who cannot, or those who have suffered significant adverse financial events, or multiple adverse events.

    Those unfortunates of which there are many, could probably not afford your consultation advice anyway so it is not surprising perhaps that you may not have these types of clients or relate to their circumstances?

    The pathway to a comfortable life, after the ability to generate sustainable regular income by personal effort, is not always as smooth as the perfectly informed and acted upon scenario.

    I disagree that the national super is a viable backstop, as it barely covers groceries and staples, it assumes one has freehold accomodation, and confers the beneficiary upon the state in all capacities of need.
    I hear what you're saying but any consideration of the level of government funded national superannuation, in my opinion needs to be viewed in the context of the total support packages the Govt provide from cradle to grave. We support parents now for a reasonable period even before they give birth, the level of working for families support is extremely generous in my opinion, (is it right by way of example that Mr and Mrs Joe average with two kids pay for those that chose to have nine ?...where is the level of self accountability in terms of how many children you can afford to raise ?).

    In my opinion, (acknowledge others will have a different one), we have one of the most comprehensive cradle to the grave social welfare systems in the world. Its not gold plated and neither should it be, we can't afford that, we're not that rich as a nation. There has to be a reasonable safety net for the people who have fallen through the cracks for one reason or another and I think there is, but there also has to be some sense of self accountability. (Keep in mind that in many countries in the world their is no national superannuation at all and if you haven't saved or your kids aren't supporting you in retirement you have no future and I am sure people in those countries are very mindful about considerations around looking after themselves). The main reason the Govt initiated the Kiwisaver scheme in was to encourage that self accountability.

    For those that haven't made adequate provision for their retirement for whatever reason in their 65 years, (soon to be 67 years I believe), they have to accept the basic safety net and perhaps some other compromises that might actually prove to be beneficial. For example a client of mine that was of modest means came to retirement age and for reasons obviously I can't go into, (other than saying they were adverse), still had a $200K mortgage on their modest property in West Auckland, (this is a few years ago before house prices went crazy). They sold that for about $500k from memory and bought a house ion Te Kuiti on eight hectares for just over $200k, paid their mortgage off and had a little left over.

    They love animals so they now enjoy having a wide range of them, including lots of chooks for heaps of eggs on their little farm and a large vegetable garden so they're partially self sufficient and they're close enough to Auckland so their kids and grandkids can come down and stay. They seem happy enough with all their animals and living a modest lifestyle. Proof you don't need a fortune to retire on...you be the judge !

    Can't buy a property any more for that sort of money that provides some support in your retirement ? What about this ? Have a few chooks and one lot of rent in addition to your national superannuation.
    http://www.trademe.co.nz/property/re...-892631536.htm What's the bet that some people would say that's not good enough and I deserve something closer to my family and in a warmer climate ? My answer is, save for it then !!

    Raz, 85 years is the answer to your question above, based on statistical averages for a 55 year old non smoking male at present. In response to your other point above, yes absolutely giving back and being part of doing good for the community in terms of a non profit organization or helping people is a very important part of life. We spent most of last year trying to help our daughter's boyfriend kick his drug and alcohol habits and trying to give him a leg up in life including supporting him back into work, taking him into our own home rent free e.t.c.e.t.c. What we found is that some people simply need to man-up, grow up and learn to carry their own weight, (that self accountability I was talking about earlier). He comes from a family with eight other siblings...I am not surprised his own family have given up on him...enough said. Contrary to some people's thinking, not all professionals live in ivory towers and are afraid of getting their hands dirty with helping others.
    Last edited by Beagle; 20-01-2017 at 11:20 AM.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  7. #307
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    Here is Tony Alexander suggesting baby boomers aren't ripping off the younger generations. The 20% interest rate argument has sprung up again.
    http://www.stuff.co.nz/business/9000...h-house-prices
    He is right about people doing less for themselves these days. I almost feel guilty mowing my own lawns as I will be depriving a contractor some work.
    Just to show I can look at an argument from both sides.

    Personally I would also blame dumbass economists like Tony and their stupid economic theories. They repeat these theories even when there is evidence and a logical argument that endless growth through more debt and lower interest rates eventually becomes unsustainable. Current house prices are a result of these dumb theories. I can't remember where I saw it, probably an American graph but the last 20-30 has seen a steady expansion in money supply along with a steady rise in house prices with interest rates dropping from 20% back then to where they are today. Maybe Tony could tell us where we go once interest rates reach zero. Today's house prices will be nothing compared to prices if rates go negative.
    I had sort of given up reading the opinion of this cheerleader for housing as he seems happy to go with the flow. We need a change in thinking not more of the same.
    http://www.sharechat.co.nz/article/e...zier-says.html
    Graeme Wheeler cracks me up suggesting we have low inflation. (Tried to buy a house lately Graeme?)
    Actually economists are generally very intelligent people I just don't buy into their theories of endless growth.
    Last edited by Aaron; 03-03-2017 at 08:08 AM. Reason: tone down the abuse of economists

  8. #308
    Speedy Az winner69's Avatar
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    Aaron - I still mow my lawns ... and the neighbours as well (for love) ....even the kids say why don't you get somebody to do them them for you you silly old bugger. Attitudes have changed eh

    Home ownership / affordability / supply and demand or whatever - this chart says a lot about why we are at the situation we are
    Attached Images Attached Images
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  9. #309
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    Quote Originally Posted by winner69 View Post
    Aaron - I still mow my lawns ... and the neighbours as well (for love) ....even the kids say why don't you get somebody to do them them for you you silly old bugger. Attitudes have changed eh

    Home ownership / affordability / supply and demand or whatever - this chart says a lot about why we are at the situation we are
    The graph I assume is America and the sharp decline after 2016 was their property market crashing. It says that less people are able to afford a house, I am unsure if it says why there are less homeowners. You could guess rising house prices from the 80s onwards as money supply increases and interest rates fall for 30 years pushing up house prices.

    Possibly the 1980s was the start of Reagan/Rogernomics and with the cutting of what I thought were outrageous top tax rates fewer and fewer people have accumulated more and more of the wealth. Wealth inequality has been on the rise in NZ since those days. The trickle down effect has been proven to be another economic theory that is bulls**t. The fact is if fewer people own all the land how is there an opportunity for anyone not born into wealth. I always wondered why peasants and serfs put up with Kings and Queens and Barons etc back in the day but I guess as long as you are well fed you can assume the well off are well off because they are better than you. i.e. work harder/smarter and are more intelligent so deserve their status in society and should not have to share with the peasants. Maybe the 1980s destruction of unionized labour has helped keep wages stagnant while house prices increased globalization might have also put downward pressure on wages.

    Personally I think we should be trying to build the biggest middle class of any country in the world. Hard workers and smart people should be rewarded for their efforts but they should be asked to contribute back to the society they are doing well in. National's promised tax cuts show a different way of thinking by the national party. Upping a regressive GST to cut a progressive income tax rate and refusing to discuss a wealth tax indicate the national party and all those that vote national believe we should be going in a different direction but for whatever reason those voters are still the majority in this country so maybe it is my way of thinking that is stupid.
    Last edited by Aaron; 03-03-2017 at 10:12 AM.

  10. #310
    Speedy Az winner69's Avatar
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    No Aaron - the chart is for New Zealand

    Since the Resource Managemnt Act RMA came into force home ownership rates in NZ have declined

    Chart a couple of years old but the line has gone down further
    Last edited by winner69; 03-03-2017 at 10:31 AM.
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

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