How much capital do I need to retire comfortably on ?

[SBQ]

We are clearly behind late to the party in NZ with Kiwisaver and a number of other pension/super measures and incentives. With 'expectations' or a 'right' for many of retirement at 65, along with healthcare costs, demographics and life expectancy, Kiwisaver for many pay for a good overseas trip and that's about it. It certainly won't be enough to live on happily ever after.

Clearly there needs to be more savings and also tax advantages to do so - so there is a runway into means tested state super, or similar.

Problem is also the political will to raise the pension age, impose more costs on business (Left has no issues with this), lower tax take from Kiwisaver and have a meaningful plan. Some of these measures would be unpalatable to voters, some would be vote winners.....

When Kiwi Saver was introduced, I laughed at the 3% contributions (with employer matching minimum 3%). You hit the nail right on the head, as I said back then and insist the same today, KS will never get people rich enough for retirement. It's not a savings scheme that is designed for people to rely on for pension at senior age. Nor would you find any NZ financial advisor that would agree on the short comings of KS. I've been very vocal on this part in this forum for many years but people take insult for when I spew the reality.

The NZ gov't really needs to look at what Canada is doing. Every few years or so the federal gov't gives more and more back to the working class, while increasing taxation on the ultra wealthy (through clawbacks on their pension when they file their tax returns). Back in 2009 when the Tax Free Savings Account (TFSA) was introduced, I told my dad that I would open the account for him and you just sit back and watch. TFSA offered any Cdn resident to invest their contributions that would grow 100% tax free. At introduction the maximum allowed was $5000 for which my father said that was chump change. He is correct and the reality was, TFSA was not enough to boost the impoverish Canadians. So all sorts of other 'tax free' accounts came about, and recently, the "First Home Savings Account". Unless you had luck like I had with my father's TFSA (keep in mind, one can only contribute each year $5,000 back then, to now indexed to inflation so $6,000 for 2022 onwards), the end result is only what want would end up having in Kiwi Saver, though I would believe the TFSA would have the better edge being 100% tax free vs KS being paper gain taxed under FIF every year that's positive. Anyways here's the end result of my father's account:

https://i.imgur.com/vniwFw0.png

NZ is being left behind in the realm of individual financial literacy and independence. I'll repeat again, the financial advisers are helping themselves as Warren Buffet says, "The helpers help themselves" ; so any managed fund has no incentive to maximise the returns for their investors as they they charge hefty management fees and above all, IRD being the biggest take through taxation.

[ynot]

We are clearly behind late to the party in NZ with Kiwisaver and a number of other pension/super measures and incentives. With 'expectations' or a 'right' for many of retirement at 65, along with healthcare costs, demographics and life expectancy, Kiwisaver for many pay for a good overseas trip and that's about it. It certainly won't be enough to live on happily ever after.

Clearly there needs to be more savings and also tax advantages to do so - so there is a runway into means tested state super, or similar.

Problem is also the political will to raise the pension age, impose more costs on business (Left has no issues with this), lower tax take from Kiwisaver and have a meaningful plan. Some of these measures would be unpalatable to voters, some would be vote winners.....

Our super certainly below other countries. Not uncommon for the average 50 year old Aussi to have $500 - 1 mill in their super.

[Bjauck]

Our super certainly below other countries. Not uncommon for the average 50 year old Aussi to have $500 - 1 mill in their super.

Of the Kiwis who actually bother to vote, many would have their money in real estate, or aspire to build up or inherit equity in real estate. So there is considerable vested interest in NZ's general CGT-free status quo, and to remain electable the major parties know this.

To enable effective super and savings schemes with better tax concessions, how would the lost tax revenue be funded?

[Sideshow Bob]

Our super certainly below other countries. Not uncommon for the average 50 year old Aussi to have $500 - 1 mill in their super.

While Kiwisaver has only been in existence since July 2007, so a 50 year-old would have maximum of 15 and a bit years and missing alot of compunding saving, compare that to here..... https://retirement.govt.nz/news/late...%20%2410%2C000.

[SBQ]

Of the Kiwis who actually bother to vote, many would have their money in real estate, or aspire to build up or inherit equity in real estate. So there is considerable vested interest in NZ's general CGT-free status quo, and to remain electable the major parties know this.

To enable effective super and savings schemes with better tax concessions, how would the lost tax revenue be funded?

Simple, by forcing those voters who own massive wealth through owning multiple houses, to start paying tax on those gains. But there's a lot more going to just selling most of the population to invest for retirement. There's social benefits, pushing through barriers between the class society of rich and poor. When you elevate the lower incomes up, you get synergies in other areas where gov'ts don't have to spend too much time on. A good example is education ; if there was an investment scheme that grew tax free and allowed the recipient to fund their tuition, that is a massive win win for both the gov't and those going for education. Likewise in the area of buying their first home.

[SBQ]

While Kiwisaver has only been in existence since July 2007, so a 50 year-old would have maximum of 15 and a bit years and missing alot of compunding saving, compare that to here..... https://retirement.govt.nz/news/late...%20%2410%2C000.

According to that article, it's very shameful:

"The average KiwiSaver balance is $29,022, with the average balance for a male 20% higher than the average balance for a female – males ($32,553) and females ($27,061).

Those balance are a HUGE difference to the growth in my father's TFSA (link above). $300,000 CDN vs $30,000 NZD ? Contributions to each investment scheme would be similar too as TFSA start in 2009 - $5,000 and grew to now $6,000. Actually the person on Kiwi Saver at the minimum 3% contribution should see 6% total going in - considering a person on $100,000/year (not out of the ordinary living in Auckland), they put in $6,000 towards KS.

Why is there such a huge difference? Psst... Mgt Fees and IRD's invisible hand. Oh also, those differences between 'conservative' and 'aggressive' is of moot interest because for the vast majority of those years from 2009 onwards, interest rates were at record lows so who is the fool to apportion their KS fund to have more fix term interest when they should be going all out in equities?

[ynot]

While Kiwisaver has only been in existence since July 2007, so a 50 year-old would have maximum of 15 and a bit years and missing alot of compunding saving, compare that to here..... https://retirement.govt.nz/news/late...%20%2410%2C000.

My Ausi numbers are only from personal experience having worked there myself, so not sure on true ausi stats but 10% is a lot bigger than 3% for starters.

[stoploss]

Our super certainly below other countries. Not uncommon for the average 50 year old Aussi to have $500 - 1 mill in their super.

In Australia

411,128 accounts with 1 Mio +
80,000 with 2 mio +
11,000 with 5 mio+
100 with 50 mio +
Wait for it .... 1 with $ 544 mio , great retirement coming up !!!!

[777]

Apples and oranges.

There are so many incentives in Australia that encourages people being in their superannuation scheme where as here there is no point in putting in more than to get the maximum employers contribution and achieve the $1040 odd to get the taxpayers prize.

[Sideshow Bob]

In Australia

411,128 accounts with 1 Mio +
80,000 with 2 mio +
11,000 with 5 mio+
100 with 50 mio +
Wait for it .... 1 with $ 544 mio , great retirement coming up !!!!

Have they worked out who has the $544m yet?? They were picking Gina Reinhardt but don't think its her.