July 6, 2025 • 41 mins
This week, the Government's KiwiSaver contribution was halved under budget changes.
Employers will also have to fork out a mandatory 4% contribution to adjust for the deficit left by the Government's contibution.
That bump's expected to stifle potential salary increases, and in turn, our retirement funds - leading many to question what changes we really need, and what we can do for ourselves, to support our golden years.
Retired financial advisor and writer Martin Hawes joins Andrew Dickens for Smart Money...
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Episode Transcript
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Speaker 1 (00:05):
You're listening to the Weekend Collective podcast from News talks'b.
Speaker 2 (00:10):
This was a big good afternoon to you. I'm Andrew
Dickinson for Tim Beveridge, who's on school holidays and he's
back again next weekend. This is the Weekend Collective and
we come to the part of the program we cour
smart money. We heard this week that the government's key
we say for contribution is to be halved under budget changes.
Or we knew that already at employers will have to
(00:30):
fork out a mandatory four percent contribution to adjust for
the deficit that bumps expected to stifle potential salary increases
and in turn our retirement funds. So we've got to
start questioning ourselves, what changes we really need, what we
can do for ourselves, how to support ourselves in the
final third And as my guest once wrote of Art
the twenty good summers at the end of our lives.
(00:53):
And my guest is the best selling financial writer and
investment advisor, Martin Hawes and joins me. Now, Hello Hello Martin.
Speaker 3 (00:59):
Yeah, Hi, Hi there Andrew. Just a weak correction, I'm
no longer a financial advisor.
Speaker 4 (01:04):
Hi.
Speaker 3 (01:04):
You handled my licensed back A couple of years ago.
Speaker 2 (01:07):
Ah, it's okay, we said, there you go. You're enjoying
the twenty last Summerson. Very good, okay, So welcome on
into the program. The key saber changes. What did you
make of them?
Speaker 3 (01:19):
Well, I thought it was a bit of a shame, actually,
because the group of people I'm most sorry for, those
who are self employed. Self employed get very little incentive
to join KVY saver. And about the only thing they
were getting was the five hundred dollars that government made
(01:40):
as its contribution provided you put one thousand dollars in
and that's been hard once again, if you go right
back to when keV saver was first started in about
two thousand and seven, there was a kickstart of one
thousand dollars and everybody was just given that gratis and
then assuming that you put one thousand dollars a year
into your kiwisaver. Initially the government would give you one
(02:03):
thousand dollars. They reduced that to five hundred dollars, and
now they've reduced it again to two fifty. So the
only the only incentive that self employed people have to
join qpsaver is in fact being whittled away. And it's
now I wouldn't say next to nothing. It's still two
hundred and fifty dollars and you as well have that
(02:23):
for the sake of filling out a form. But there's
not a lot of incentive for self employed to join qysaver.
Speaker 2 (02:30):
Yes, but let's remind everybody that in fact it's still
your money. Yes, it's good to have it now, but
at the same time you need to have it later.
So keeping up the contributions is a good thing.
Speaker 3 (02:41):
Yes, it is, assuming you are a member. And you know,
a lot of this is about front end incentivization because
unlike Australia and a lot of other countries, keep Savior
is not compulsory. You can join it or not at
your own choice. In Australia workplace, superannuation is compulsory, you
(03:03):
join it. Employer play pays now twelve percent of your
salary into your superuation. And that's why you know, if
you look at the Australian system, their funds are far
far bigger. That's far more put away for superannuation for retirement.
(03:25):
But also the funds are more sophisticated and you know
there are many more options in the now. New Zealand's
a smaller country, and you wouldn't expect us to have
the same amount of money, but a population, it's a
lot more that they've got because of the compulsory nature
of what.
Speaker 2 (03:44):
Y sure, sure, But should we be considering that KII
sabor contributions should be compulsory. It's worked for Australia.
Speaker 3 (03:54):
Yeah, well, I personally would have it compulsory. Now there'll
be a lot of people who were Maybe not a
lot of people, but there will certainly be some people
who would find that very hard. If they've found three
percent or four percent or five percent taken from the salary,
that'd find it hard to make ends meet. But you know,
the future is where you're going to spend the rest
(04:15):
of your life, and the idea of saving for retirement
is to try to even out your income and therefore
your expenditure over the course of your lifetime. When you're working,
it's fine, you're getting that paycheck coming in every fortnight.
You've got that money. You can live on that when
you retire you have in thet super and for sixty
(04:41):
percent of retire retirees, not much else. Sixty percent of
retirees in New Zealand retire and live on in thet
super and up to one hundred dollars a week. Now,
I think people deserve that final third of their lives
to be better than what would be afforded by New
(05:02):
Zealand Super, which for a married couple is depend on
tax rates and so on, but all at thirty five
thousand for a single person maybe twenty thousand dollars. So, however,
we think about how you would like to live on
that with maybe if you're lucky and done some saving
or got compliant family, maybe up to another hundred dollars
(05:24):
a week.
Speaker 2 (05:25):
Exactly right, not much. I always like to think of it.
If you're lucky, you might get one thousand dollars a fortnight,
you know, that's that's twenty six thousand dollars a year,
and then whatever you've saved, and then maybe you should
actually try actually running a trial program and going what
could I do with that? No, of course, the sums
that are whether you have to pay, whether it's rent,
whether it's housing, whether it's electricity, it's your phone. You've
(05:47):
got to pay your phone. That's you know, sixty backs
a months. You know you've got to You're got to
do all that and all that sort of stuff. Ye,
and you would like to be able to buy yourself
a cappuccino at least every now and then. So so
have a trial run at it and then think about it. Now. Look,
if you are thinking about your retirement years and you're
thinking about what should I do, and you need a
(06:08):
little bit of you know, some some sort of conversation
about the whole thing, we're right here waiting for you
right now. And the number the phone is eight hundred
eighty ten eighty Martin horses here, and if you can
tell them some of your circumstances and some of the
questions that you have in your mind, maybe we can
go some way to giving you some answers, or at
least some advice about where to look for those answers.
(06:28):
So that number again, eight hundred eighty ten eighty Martin.
Your retirement, When should you start thinking about it? Because
I know everybody they're hit fifty, they start thinking about it.
But it should it be earlier.
Speaker 3 (06:42):
It should be you know, I think was Oscar Wilde
we said, youth is wasted on the What the young
people have got really going for them is a compound
in trust. And the longer compound interest has to work,
the better off you can be. And you know, compound
interests is simply interest on interest, and that's kind of
(07:03):
it's a virtuous circle if you like, which as it
spins you get more and more and more so that
your returns because you're getting returns on your returns, and
then returns on those returns as well, the returns get
higher and higher, and therefore you get wealthier and wealthier.
The sooner you start to spin that wheel, the sooner
(07:25):
you climb into that virtuous circle, the better off you're
going to be going to be. Excuse me, I'm carrying
a little bit of a cold at the moment.
Speaker 2 (07:34):
Everybody is. Everybody is, but we say virtuous. Some people
may say self righteous, but it doesn't matter. It's about
sorting yourself out. It's your job.
Speaker 3 (07:42):
Yep, that's exactly right. And the sooner you start, the better.
I think. Fifty is it's kind of the age. It's
to wake up call age. And that's when people really
start thinking fifty to fifty five. They start thinking that
retirement isn't or that age of sixty five may not
(08:04):
necessary be retirement, or maybe not a complete and full retirement,
but that age sixty five is starting to look like
it's in sight, and that's when people start to stress.
I suppose you suppose you'd say, now you know, I mean,
I think that's it's good that people do wake up
and start doing it then, rather than leaving it for
(08:25):
another decade. But it would be an awful lot better
have got any younger listeners that they start as soon
as they possibly can, particularly with keV Saver, so that
you're picking up your employer contribution. So if you put
on three percent, it's soon going to be four percent,
then your employer is bound to match that, and that
(08:51):
means you're effectively getting one hundred percent return on day one.
Now that's fantastic. So you're you're three percents immediately turns
into six percent of your salary. And one of the
good things about keV Save is that it is illiquid.
That is, you can't take it back out again unless
it's for the purchaser of a first time. And there's
(09:14):
a few other things like severe health and severe financial
difficulty and so forth, but at this very difficult other
than that first time, to take it back out again.
And therefore whatever you put in their compoundent crystal start
to work on that and you will be a lot
better off.
Speaker 2 (09:32):
I know that. When I first started at the BC
inz And I was twenty two, twenty three years of age,
and they said, do you want to join our superannuation
scheme and I went no, I want the money for
myself right now and now with the benefit of age.
I look back and that well, that was a stupid decision.
But we also had a INZT super that was got
rid of by Rob Muldoon, so that disappeared. And so
(09:54):
the revelation of the introduction of kiwisaver meant that there
was a scheme there that everybody could take advantageob and
you could start doing that. And as soon as it
came about, I was in. Like Flynn, my partner has
been on private superannuation since she was twenty five, and
I sit there looking at what she's managed to build
up and it's just been absolutely brilliant. Yea, So the
(10:14):
younger you are, like I always say, and have already said,
it is your money. That said, once you've decided that
you're going to actually start the savings for your final third,
how should you do it? Should you be going for
fund aggressiveness? You know, or should you be saying, well,
(10:35):
you know it says this percentage, maybe I can actually
contribute eight percent or twelve percent or more. You know,
is there a ten percent rule? How should you approach it?
Should you approach it aggressively?
Speaker 3 (10:48):
Yes, you should. Most people, most young people, that old
twenty two year old self of yours Andrew should have
been invested in an aggressive or at least a growth fund,
so of a fund that's laden with shares and property
and not so much and fixed interest in cash. So
(11:10):
you should be providing you can handle the volatility you're
providing you can just watch the thing go up and
down without panicking and changing your settings. Then you ought
to be as aggressive as you possibly can when it
comes to putting extra Yes, you will be able to
(11:33):
be better off if you do, but you just need
to be very sure that you're not going to want
that extra money for anything else. That is, you're not
going to suddenly want to start a business, or you're
not going to get yourself into a bit of financial
trouble and need to pull some money out because you
can't do it in key resaver. So a lot of
people would have the key resaver going up and they'll
(11:56):
be contributing three percent, soon to be four percent into that,
picking up the employer contributions, picking up the little government
contribution that still exists. But then beside that almost as
a sidecar, if you like the vest and another fund,
and that other fund would be liquid. It may be
(12:17):
almost identical to the keep you Saving fund, but it
may even be with the same provider. But the big
difference is you would be able to get at the
money of something unexpected happened and you needed it.
Speaker 2 (12:28):
When it comes to planning for retirement, though, I'm having
I'm starting to track that way, and I'm getting pretty close.
And I have mates, you know, and we were talking.
I was doing to one friend who, due to all
sorts of circumstances, has ended up renting for the last
fifteen years, and he's now just into his sixties. And
we were at a funeral the other day, you know,
(12:50):
of a friend who had died at the age of
sixty three, and I said to him, I said to him,
you don't have your own house. You don't have the
security of your own roof at the moment, and when
you're thinking about those, you know, the final third you
have to think about illness, You have to think about impairment,
and you have to think about will I have a
(13:11):
roof over my head, will I have a bed underneath
my back? And will I have money to buy a cappuccino.
So there's a big old checklist that you really have
to go through. Isn't there to make sure that you
are ready for the future, which will not be as
liquid as you're present.
Speaker 3 (13:29):
No, that's right, And I do think one of the
best ideas is to do a little milk budget. So
pretend that you're no longer working. What does a what
does an ordinary day look like? What does an ordinary
week look like? What does an ordinary fortnight look like?
And then try to cost that out how much? And
that gives you an idea of how much you'll need.
(13:53):
One of the things that's happening, and it's happening in
space at the moment, is that people are getting to
age sixty five finding that they can't retired because they
simply don't have the savings put aside, so they're carrying
on working. So we've now got forty eight percent of
people aged between sixty five and sixty nine still working,
(14:18):
and the bulk of those I can't tell you the
exact number. But the bulk of them are working because
they need to, because they need the money. Now I'm
over sixty five and well over sixty five, but I'm
still working. I could retire, but I choose not to.
I actually get energy out of out of working, which
I know may sound a bit weird, but I do.
(14:42):
And so I've quite not justly and deliberately carried it,
carried on working even though I could retire if I
wanted to. But the bulk of people between sixty five
and sixty nine is forty nearly half near enough to
half of people in that age group are carrying on working.
In the bulk of them are doing it because they
(15:02):
need the money.
Speaker 2 (15:03):
Well, we actually start up. I talk it when we
talk about the changes to the governments as Kiwisaber plans.
You said, the person who feel most for the self employed,
and a lot of them are like tradees, and they're
like contrastors, and they do very physical work. And whenever
I do conversations about superannuation, they start talking about how
they've wrecked their body. You know, their knees are shot,
(15:23):
their arms are shot, their body is shot. They can't
do the work. That they've always done their whole life
and they don't feel that they can then pivot into
a new career. And so really those people who choose
those sorts of careers when they're young and they're bulletproof
should also be thinking you've got to put a part
aside for the day when you can't lift a hammer.
Speaker 3 (15:46):
Those people, especially don't argue Andrew, really need to be
thinking about socking enough aside for a decent tirement, because
they're simply not going to be able to carry on
sharing sheep or balling around on a roof, beang and
nails or whatever they're doing. Fortunately, the number of those
whose really heavy manual jobs are decreasing, but there's still
(16:10):
enough of them, and there's still enough on our sort
of age group who started off from their well, I
was going to say their twenties. In fact they're teens,
because they're just you know, they left school of fifteen
or sixteen, a lot of them, and they've been working
on a farm or working as a builder or working
as a sharer ever since, and it's very hard on
(16:33):
the body. It's one of the issues that when people
talk like I do about raising the age of new
Zealand superannuation that would need to be very careful of
as a society that we pick up those people who
simply cannot keep working for another couple of years.
Speaker 2 (16:51):
Well, yes, I was going to mention that later in
the program, because the big debate is there. I know that.
On Friday, Matthew Houghton wrote an article saying, you know,
SUPER has got to change. It's going to get older
and it may have to get less. We know that
the imposition on the government's accounts is enormous because of SUPER,
and we have this growing bubble of people that are
(17:11):
going through And every time I do talk back on this,
someone phones up and says, look, you know, I'm a laborer.
You know I must have it at sixty five because
I just cannot work. But that's obviously a threat, isn't it.
Speaker 3 (17:25):
Yes, and we've I don't know what the solution is.
Maybe it's a doctor's certificate or something. Look, I don't
know what the answer is, but we have to find
some way of picking those people up because I think,
and certainly the National Party's but policy is still to
raise the age of retirement from I think sixty five's
(17:48):
to sixty seven of course we've done that before. We
did that back in the nineties. We actually raised it
from age sixty to sixty five. Yep, and we did.
Speaker 2 (17:56):
It There was Jim Bolger, and he did it quick.
He didn't even a lot of these proposals are sixty
five to sixty seven over twenty years, So it's not
good of affect you if you're fifty eight, go what
they're touching my super But it will if you're thirty.
But that was over twenty years. Bolger did it like
in two.
Speaker 3 (18:14):
Yes, I think more than that.
Speaker 2 (18:16):
But he did it quick. He didn't. It's a big,
big change and it was a.
Speaker 3 (18:20):
Shot, yes, much quicker than what's being proposed. Now, okay, we'll.
Speaker 2 (18:25):
Ask you more about that a little bit later on.
This is Martin Howes, of course, financial writer no longer
an advisor, though he's still working even though he doesn't
have to because he can. The one thing about AI
it can replace us, Martin, but it can't replace someone
who digs a ditch, you know. So there's still going
(18:45):
to be a lot of those people around the place.
If you want to put a question to Martin about
the money for your retirement or any of those sorts
of questions about money at all, You can text us
ninety two ninety two. We would prefer you to phone
oh eight one hundred and eighty ten eighty. But Bob
sent it in a text says I'm retired, I don't
need my Kiwi saver, so it's still all in there.
Would would a term deposit be a better choice? Should
(19:07):
they pull it out of the key WE Saver and
started investing it in term deposits or something? Taking into
account is a very changeable world at the moment, Donald
Trump and tariffs and wars and all sorts of things.
What do you reckon?
Speaker 3 (19:22):
Well, it's very hard to answer Bob's question because I
need a lot more information about him and what other
assets he owns and what is life. But look he's
at RFN and how much he's spending and looking at
us a total overall thing. Personally, for most people, I
would keep the key saver going because the KEYV Saver
(19:43):
gives you a ready made fund which gives exposure through
to bonds and equities, shares, the commercial property and so forth,
and all of those things. Yes, they're all volatile, but
they do give much much better, better returns. So much
better than over time, much better than TERMB deposits. So
(20:07):
if he can stand the volatility and he's not going
to need the money for a few likely to need
the money for a few years, then with people who
are over sixty five with the a q saver funds,
they all of a suddenly changed to being liquid, that is,
you can draw them out at any time in the
whole all part. So I have I've kept my qpsaver
(20:31):
fun going and I use it for my health fund.
So I draw for the health funks I need, which
I needed a couple I was.
Speaker 2 (20:40):
Talking about preparing for your final days. Make sure you've
got to bed about all that, make sure you can
afford the doctor. So that's that is a genius idea.
Eight hundred ten eighty. If you like to have any
other conversations of money we are talking about in whores.
This is Smart Money on the Weekend Collective on News
Sorts THEREB it is five twenty seven. My Madrew Dickinson's
phone number is eight hundred and eighty ten eighty. Howes
(21:03):
is my special guest on smart Money. I've got a
question for you, Matton, and it comes from the text.
It comes from Shane, thank you for listening to the program, Shane,
and he says, hell a gen city thoughts on S
s R S S versus key savor For those who
don't know, S s R S S is the State
sector Retirement Saving Scheme, which was a voluntary at time.
It's saving scheme for the public sector employees. It's closed
(21:25):
these days, but if you if you got in early
in the old days, you can still contribute. It's managed
by providers like a MP. So your thoughts Martin on
S s R S S S S.
Speaker 3 (21:39):
It's a really difficult one. I'm sorry, Shane, and it's
not something I'm I'm well briefed on. I'm going to
say I don't have an opinion on that. I was
reading something about Marcus Aurelius, the Roman emperor, yesterday, i
think the day day before, and he said it's okay
not to have an opinion, and I think in this case,
(22:02):
I'll kick the touch and not have an opinion. Okay, Well,
we've been sorry about that, Shane.
Speaker 2 (22:08):
Yeah, I know. Well, it is a specific scheme with
specific qualifications to get into it and specific requirements. You
have to know all about that, and of course it's
now somewhat redundance, you know, it turned off. And that's
an interesting thing how many times we've actually had retirement
schemes and then somehow normally for political reasons, we've dropped
them for the sake of what I would say false economy.
Speaker 3 (22:33):
Yes, we had the one that Norman kirk Boughton in
nineteen seventy two, and some listeners would say that's very
ancient history at all, but to me, it's just like yesterday. Unfortunately,
Robert Muldoon won the following election and the very first
thing he did before even Parliament said was he got
(22:55):
rid of it. And people run calculations to show how
much money there would be in that now, and it's trillions.
It's it's a you know, we would all be we
would all be facing a really good, prosperous retirement if
that was still existent.
Speaker 2 (23:14):
People talk about Australia and their minerals, but I say
Australia and their super scheme meant that it was in
the hands of investors who then were advised to invest
in the country, and so that means that there's capital
available for all the entrepreneurs and the startups and the
people there to actually grow their businesses and we would
have had a far more diverse economy if we kept it.
(23:36):
But hey, twenty twenty hindsights is a terrible thing, is
it not? Noles and Napier. Again, this is a somewhat
technical question as well. Can we purchase government bonds in
New Zealand to then fund our retirement in New Zealand?
Speaker 3 (23:51):
Yeah we can. Indeed you can buy New Zealand government
bonds on me. We can either buy them when they
when they list, when they when they float, them as
they sell them, or you can buy them on the
secondary mark relatively easily through a sharebroker. I personally wouldn't
(24:11):
use government bonds to fund all of my retirement. I
would have some equities, some shares and commercial property in
the portfolio as well. It's all very well to say, well,
you know, New Zealand government bonds are very safe, and yes,
indeed they are. But inflation can rear it's likely head again,
(24:35):
as it has done in the last few years, and
in any event, New Zealand government bonds are likely to
be one of the lowest yielding investments that you could make,
simply because they are so safe. I think investors are
better to take on a bit more risk by buying
some equities, some shares, and some listed property funds, taking
(24:57):
a bit more risk but getting a better return.
Speaker 2 (25:00):
Yes, well, there we come into diversification of your retirement portfolios.
What are the best ways to do that?
Speaker 3 (25:08):
Well, one of the good things about Keep You Safe
is that almost all of the funds are diversified already.
So if you buy into most of them, there's a
little bit of doubt in my voice, and I'll come
back to that in a moment. If you buy into
most of them, you will already have the four main
asset classes, which are shares, listed property, fixed interest, and
(25:32):
cash or bank deposits. Now the proportion will change, and
that's where there's a bit of doubt in my voice.
If you brought into an aggressive fund, ninety percent of
that would be in shares and property, ten percent would
be in fixed interest in cash. That would be extremely volatile.
It would be up and it would be down. It would,
over long periods of time, give you the best returns,
(25:55):
but it would do a lot of leaping around and
getting those returns for you. But you know, you can
choose the level of risk that you want. You can
have an aggressive fund, you can a growth fund. You're
can have a balanced or conservative fund, and that will
dictate the either of turns that you get and be
the amount of volatility that the fund has. But any
(26:18):
of the funds, you know, even an aggressive fund, yes,
it will be almost all in shares and property, but
it won't be in just one company and one share
and one property. It will be it will still be
in five hundred different shares or five hundred different property
property types. So you're still getting you'd still get some dipracification,
(26:42):
even though you're it's going to be extremely volatile because
it's mostly in chairs.
Speaker 2 (26:48):
I'm going back to that that text we have for Bob,
who you know, called up and said, I don't need
my KEYI Saber, would be better for me to take
it out and put start putting it into term deposits.
And I recognize the answer that he gave to that,
and that KEYWI Saber is managed by professionals whose entire
lifetime and working life is to find the best investment,
and they're good and to diversify for you. So, but
(27:11):
if you decide to take over the control of your
own investments like that, like Bob putting everything in. He's
the one who then has to choose the term deposits.
He's the one who has to determine which one of
the four asset classes to go in. And do you
actually guarantee that you're any better than the Kiwi Saber
or any other superannuation providers.
Speaker 5 (27:29):
Yes.
Speaker 3 (27:30):
I was faced andrew by with that about four or
five years ago when I was shifting from Queen sand
Road lived for twenty years to christ Church, and I
examined every aspect of my finances, including my investments. Now,
I've managed my own personal investments since I was in
my mid twenties, and you know, it's near enoughter getting
(27:53):
on for fifty years. And when I had a good
heart look at that, I actually realized that I was
only an average investor. And that was because, you know,
a lot of my time was involved with clients presenting
climate there.
Speaker 2 (28:08):
You were great for the clients, but you were crap
for yourself. Yeah.
Speaker 3 (28:11):
The Copplers family is the poor a shot. So I
took my money and I've given it to professionals. They
spend all day, every day staring at their screens. I
don't think you want to do that. I travel a
bit now, and I don't want to pitch up on
France going rock climbing and have to look at my
(28:34):
portfolio before I head out the door. It's it's really
good to have handed that over. Somebody else does it,
and I think they get at least they get returns
that are at least as good as mine, and probably
accept better.
Speaker 2 (28:52):
And there are people who are also paid to hold
them to account because they have their own managers as well.
I go, well, you know your performance here is not
actually good enough, and they hold them to account and
again taking the hassle away from you. This is Martin Hawes.
We're taking your course in your text about your financial health.
I did mention the final third, and somebody has said,
(29:13):
if you're talking about retirement savings, are you suggesting that
we're all going to live to ninety? I mean no, no,
it's it's just a phrase i'd like to say. But
there is the final third, the twenty last summers that
you do really need to think about, and you need
to think about that in the first two thirds as well.
We've mentioned that before. Eight hundred and eighty ten eighty
is a number to the phone if you have a question.
For Martin or ninety two ninety two if you want
(29:36):
to send it in a text, but remember that has
a small cost involved in. Is that a good investment?
I'm Andrew Dickins. It is eighteen to six. I'm in
for Tim Beverte. He's back next weekend. My special guest
on Smart Money is Martin Hawes, a financial writer. And
got any new books out? Yes, I have?
Speaker 3 (29:54):
About or six weeks ago I had a book called
Retirement Ready came out and it's done. It's more than
six weeks ago, it's more like three months ago, and
it's done extremely well. It's sold very well, indeed, so
my publishers are very pleased with me.
Speaker 2 (30:13):
Good man, still working all these years later.
Speaker 3 (30:15):
Look at you go, Hey, one of the things Andrew
that you talked there about living to ninety, if you're
a sixty five year old woman living to this, listening
to this, then the chances are, you know, on average,
that person would live to about eighty seven or eighty eight.
(30:35):
So it's getting pretty close to ninety.
Speaker 2 (30:37):
And we're only getting better at staying a life. And
of course we are the new older people who are
coming through are even fitter and healthier than the new
older people. I read a fantastic article earlier this year
about just how fit and healthy our sixty and seventy
year olds are. They've lived virtuous lifestyles they learned earlier,
and they're keeping everything going, and they're doing weight training
(30:58):
and all sorts of stuff, and that will mean even
more longevity, which means even more costs when it comes
to maintaining super And we'll get to that question later.
So let's welcome to the pragon. Henry. Hello, Henry, Oh,
good evening.
Speaker 4 (31:11):
This is a really interesting topic. And actually I'm listening
as I'm doing my tax return for the year. A
bit of background. So I'm fifty three years old. We
have a freehold house need assets of about one point
six and investments. A question I'm constantly asking my investment
advisors is what's the number that I should be aiming for,
(31:33):
thinking I've got ten years left to work more or less?
What number is a good number to retire?
Speaker 3 (31:39):
It depends what you want in retirement. So if you
thought that you wanted one hundred thousand dollars a year
in retirement, and that's you know, that's not silly, then
if you had a five percent draw down rate. So
that means if you drew five percent of the initial
amount that you had, let's say that was two million dollars,
(32:01):
season you've grown you one point six to two million dollars.
If you do five percent out, that would be one
hundred thousand dollars From that two million dollars. You can
draw that one hundred thousand dollars out. According to the
figures that the actuaries have done, you could draw about
five percent of that out have one hundred thousand dollars
(32:21):
a year plus ends in super Now that one hundred
thousand dollars is after tax, but it does include running
down your capital so that when they do the numbers
that they're saying, you're not just spending the returns that
you're getting on your two million dollars, but you're also
spending a little bit of the capital each time you
(32:42):
draw some money out, and that runs it down. And
these things are usually worked out so that the money
would last about thirty years.
Speaker 2 (32:53):
Eighty three sound good to you, mate, But then after
eighty three, what are you going to do then and
go back to work?
Speaker 3 (33:01):
No, you'd probably use your house to give yourself some income,
you know, with a reverse inuity mortgage or one of
the other products that are available like that. I'm assuming Henry,
that you know you're going to carry on working, say
till sixty five, so that would mean thirty years would
take you through to ninety five, which should see you out.
(33:25):
One of the things one of the other things about
retirement income. There's some really fascinating things about retirement income.
But one of the obvious things that a lot of people,
even though it's obvious, people don't take account of it,
and that is that as you as you go through
retirement and your age, say you get into your late seventies,
(33:45):
maybe into your eighties, your expenditure starts to drop because
you can no longer travel the same as you did.
You're no longer going on ski weeks or any anything
like that. So you start to spend significantly less until
you get to those final year or two where it
might pop back up again because you may need some care.
Speaker 4 (34:06):
So you no longer have hungry teenagers living with the island,
which is probably.
Speaker 2 (34:11):
Exactly you no longer go out to dinner with mates
because the mates have passed on. You know, there's all
sorts of things. You know, it's a horrific. There's a
horrific reality to the whole thing. Henry, You've seem to
have reacted to all of this and stun shock. Are
you okay?
Speaker 4 (34:25):
No, Look, that was the answer broadly I was expecting.
I mean, I guess that the follow up question is,
I mean, so you've said an annual drawdout of about
one hundred grand, I mean that is that realistic? I mean,
we obviously very much want a choice lifestyle. We want
to do the traveling, Like, what is the number that
we should be thinking about for an annual expenditure? Is
it one hundred? Is one hundred and fifty? These are
(34:46):
questions that weirdly that the people that I pay to
look after our investments just never seem to be prepared
to answer.
Speaker 1 (34:52):
No.
Speaker 3 (34:53):
I think if there's one part of finance that you
are about your time planning that you do want to
do yourself or I really have to do yourself, it's
doing the budget. You need to sit down and figure
out what you lifestyle is going to be like and
what the budget for that is going to be. And
dub dub dot sorter dot org dot z has a
(35:15):
really good budget and tool and that will at least
prompt you to make sure you pick up all the categories.
You can have a very good life on New Zealand
on one hundred thousand dollars plus another thirty odd or
thirty thirty to forty odd coming from INSI super you're
going to have And a lot of this depends on
how much you're going to travel, because travel does soak
(35:38):
up a lot of income.
Speaker 2 (35:40):
Yeah, there we go, and thank you so much, Henry.
We've got Marton Hawes online and we're back after the break.
This is VIEUSTI. There be the Weekends Collective. Andrew Dickins
with Martin Hawes. We took the money and we've got
Jerry online. Jerry, Hello, you're on with Martin.
Speaker 5 (35:55):
Good evening Andrew and Martin. I've always heard many advice
shows about stocks, bonds, commercial property, land, all those sorts
of things. But when I think about things like professional
sports and professional musical entertainment, I never hear any advice
about investing in those businesses.
Speaker 2 (36:17):
And your question is are they good businesses?
Speaker 5 (36:21):
No, I know they're good businesses. In nineteen ninety five,
almost personally made ninety five million dollars.
Speaker 2 (36:29):
So do you have a musical enterprise that we can
invest in, Jerry or We're not quite sure about your
question there.
Speaker 5 (36:35):
My question is why is there no advice on how
to buy a stock in the music business or the
sports business.
Speaker 2 (36:44):
Well, I could give you a side answer on that,
because David Bowie and other rock and roll artists actually,
instead of releasing bonds, they actually bonded up the output,
which you could then buy a slice of it. Then
you get some of the capital that comes from future
licensing of those records. So the Bowie bond, I think
Springsteen's done a bond. These other people have done bond,
So I just hunted out and look for it if
you want, and check the returns and and and check
(37:08):
what the bond manager specifies. That is that about, right, Marton?
Speaker 4 (37:14):
Yeah?
Speaker 3 (37:14):
I think so. They've been quite a lot of artists here.
You correct me if I'm wrong. Who have they've sold
off their back list, their their playlist? I think even
the Beatles of.
Speaker 2 (37:26):
Beatles went a while back.
Speaker 3 (37:27):
Absolutely, I guess it's it's not really a main asset
class in the sense that shares are an asset class
or property as an asset class. It's instead it's instead
an industry within those categories, and it's they are to be.
To be honest, music and sports are not industries that
(37:51):
I know a lot about. I do know that you're
quite right that they have given extremely good returns. I
think you can buy small amounts of them as as
simply a small share. You know, you can buy one
or two shares or or something like that. If you
go out to the New York Stock Exchange. You won't
(38:12):
be able to buy them that I'm aware of in
New Zealand. Well, that is just simply because there are
no scale music, music businesses or sports businesses here that
are available. Or you could certainly do it on the US.
I'd say it would be something that you would You'd
need to know the industry. You need to know what's
(38:34):
going on, what is available, what is facale, how well
is that price and so forth? Or Jerry who just
go down to the corner, find a busker, give them
a hundred bucks and write a little contract and say,
I hope you turn out to be edshe and let's
see how that plays out.
Speaker 2 (38:50):
Thank you so much for your call. Quick question for
Emma says how important is home ownership in retirement? I
am fifty three years old. I haven't bought a new
home since I separated, and I know a number of
people like that from a previous relationship and the sale
of the family home. So now she's fifty three without
home ownership. How important is that?
Speaker 3 (39:11):
I think it's important. I think it's a lot better
to go into retirement owning a house.
Speaker 5 (39:16):
Now.
Speaker 3 (39:16):
That's not to say that the costs of owning a
house are insignificant, because you know, rates, insurance, maintenance and
so forth are quite significant, but they're not as large
as rents. And also in New Zealand, you can't usually
rent for the long term. There's no security of tenure
(39:37):
when you rent, and you don't, as your age, want
to be shoved from pillar to post, you know, told
by the land. Would you have to get out and
then move to another place and then have to have
to get out out of that. I would try, Emma,
to buy a house to go into retirement if I
possibly could.
Speaker 2 (39:54):
All right, And I'm seventy six years old with a
good size these portfolio over one point six billion plus
two freehold properties. But my son is keen for me
to invest in bitcoin thoughts.
Speaker 3 (40:05):
Well, it's not investing in bitcoin you're speculating on bitcoin.
I have no idea whether boocoin is going to go
up or go down. It's probably about a literally a
coin toss as to which it's going to be unless again,
you're extremely well informed, you and you know what it's
(40:26):
all about.
Speaker 2 (40:27):
Martin has been brilliant having you on and I thank
you so much for taking time out of your house
and also while you're a little bit crank again, you
know a little bit sick, so it's been lovely having
you on and can't wait to have you back on
on the program again. All the very very best, Thank
you very.
Speaker 3 (40:39):
Much, Andrew.
Speaker 2 (40:40):
And that brings us almost to the end of our program.
We have news and sport in just a few moments
of time. Have I got a little bit of Black
Sabbath to be played at this moment? Yeah, because last
night at Villa Park and Birmingham, Ozzy Osborne and Black
Sabbath did their final, final, final concert. They've done that before,
but they came back one more time and apparently the
reviews it was epic and it was extraordinary. So I'll
(41:03):
leave you with a little bit of Black Sabbaths. We
rock into our night. My name's Andrew Dickens. I'm back
on early edition tomorrow morning, so I'll see you at five,
won't I My thanks for producer Isaiah tell Up.
Speaker 1 (41:27):
For more from the Weekend Collective, listen live to neth
Talks It'd be weekends from three pm, or follow the
podcast on iHeartRadio.
You're listening to the Weekend Collective podcast from News talks'b.
Speaker 2 (00:10):
This was a big good afternoon to you. I'm Andrew
Dickinson for Tim Beveridge, who's on school holidays and he's
back again next weekend. This is the Weekend Collective and
we come to the part of the program we cour
smart money. We heard this week that the government's key
we say for contribution is to be halved under budget changes.
Or we knew that already at employers will have to
(00:30):
fork out a mandatory four percent contribution to adjust for
the deficit that bumps expected to stifle potential salary increases
and in turn our retirement funds. So we've got to
start questioning ourselves, what changes we really need, what we
can do for ourselves, how to support ourselves in the
final third And as my guest once wrote of Art
the twenty good summers at the end of our lives.
(00:53):
And my guest is the best selling financial writer and
investment advisor, Martin Hawes and joins me. Now, Hello Hello Martin.
Speaker 3 (00:59):
Yeah, Hi, Hi there Andrew. Just a weak correction, I'm
no longer a financial advisor.
Speaker 4 (01:04):
Hi.
Speaker 3 (01:04):
You handled my licensed back A couple of years ago.
Speaker 2 (01:07):
Ah, it's okay, we said, there you go. You're enjoying
the twenty last Summerson. Very good, okay, So welcome on
into the program. The key saber changes. What did you
make of them?
Speaker 3 (01:19):
Well, I thought it was a bit of a shame, actually,
because the group of people I'm most sorry for, those
who are self employed. Self employed get very little incentive
to join KVY saver. And about the only thing they
were getting was the five hundred dollars that government made
(01:40):
as its contribution provided you put one thousand dollars in
and that's been hard once again, if you go right
back to when keV saver was first started in about
two thousand and seven, there was a kickstart of one
thousand dollars and everybody was just given that gratis and
then assuming that you put one thousand dollars a year
into your kiwisaver. Initially the government would give you one
(02:03):
thousand dollars. They reduced that to five hundred dollars, and
now they've reduced it again to two fifty. So the
only the only incentive that self employed people have to
join qpsaver is in fact being whittled away. And it's
now I wouldn't say next to nothing. It's still two
hundred and fifty dollars and you as well have that
(02:23):
for the sake of filling out a form. But there's
not a lot of incentive for self employed to join qysaver.
Speaker 2 (02:30):
Yes, but let's remind everybody that in fact it's still
your money. Yes, it's good to have it now, but
at the same time you need to have it later.
So keeping up the contributions is a good thing.
Speaker 3 (02:41):
Yes, it is, assuming you are a member. And you know,
a lot of this is about front end incentivization because
unlike Australia and a lot of other countries, keep Savior
is not compulsory. You can join it or not at
your own choice. In Australia workplace, superannuation is compulsory, you
(03:03):
join it. Employer play pays now twelve percent of your
salary into your superuation. And that's why you know, if
you look at the Australian system, their funds are far
far bigger. That's far more put away for superannuation for retirement.
(03:25):
But also the funds are more sophisticated and you know
there are many more options in the now. New Zealand's
a smaller country, and you wouldn't expect us to have
the same amount of money, but a population, it's a
lot more that they've got because of the compulsory nature
of what.
Speaker 2 (03:44):
Y sure, sure, But should we be considering that KII
sabor contributions should be compulsory. It's worked for Australia.
Speaker 3 (03:54):
Yeah, well, I personally would have it compulsory. Now there'll
be a lot of people who were Maybe not a
lot of people, but there will certainly be some people
who would find that very hard. If they've found three
percent or four percent or five percent taken from the salary,
that'd find it hard to make ends meet. But you know,
the future is where you're going to spend the rest
(04:15):
of your life, and the idea of saving for retirement
is to try to even out your income and therefore
your expenditure over the course of your lifetime. When you're working,
it's fine, you're getting that paycheck coming in every fortnight.
You've got that money. You can live on that when
you retire you have in thet super and for sixty
(04:41):
percent of retire retirees, not much else. Sixty percent of
retirees in New Zealand retire and live on in thet
super and up to one hundred dollars a week. Now,
I think people deserve that final third of their lives
to be better than what would be afforded by New
(05:02):
Zealand Super, which for a married couple is depend on
tax rates and so on, but all at thirty five
thousand for a single person maybe twenty thousand dollars. So, however,
we think about how you would like to live on
that with maybe if you're lucky and done some saving
or got compliant family, maybe up to another hundred dollars
(05:24):
a week.
Speaker 2 (05:25):
Exactly right, not much. I always like to think of it.
If you're lucky, you might get one thousand dollars a fortnight,
you know, that's that's twenty six thousand dollars a year,
and then whatever you've saved, and then maybe you should
actually try actually running a trial program and going what
could I do with that? No, of course, the sums
that are whether you have to pay, whether it's rent,
whether it's housing, whether it's electricity, it's your phone. You've
(05:47):
got to pay your phone. That's you know, sixty backs
a months. You know you've got to You're got to
do all that and all that sort of stuff. Ye,
and you would like to be able to buy yourself
a cappuccino at least every now and then. So so
have a trial run at it and then think about it. Now. Look,
if you are thinking about your retirement years and you're
thinking about what should I do, and you need a
(06:08):
little bit of you know, some some sort of conversation
about the whole thing, we're right here waiting for you
right now. And the number the phone is eight hundred
eighty ten eighty Martin horses here, and if you can
tell them some of your circumstances and some of the
questions that you have in your mind, maybe we can
go some way to giving you some answers, or at
least some advice about where to look for those answers.
(06:28):
So that number again, eight hundred eighty ten eighty Martin.
Your retirement, When should you start thinking about it? Because
I know everybody they're hit fifty, they start thinking about it.
But it should it be earlier.
Speaker 3 (06:42):
It should be you know, I think was Oscar Wilde
we said, youth is wasted on the What the young
people have got really going for them is a compound
in trust. And the longer compound interest has to work,
the better off you can be. And you know, compound
interests is simply interest on interest, and that's kind of
(07:03):
it's a virtuous circle if you like, which as it
spins you get more and more and more so that
your returns because you're getting returns on your returns, and
then returns on those returns as well, the returns get
higher and higher, and therefore you get wealthier and wealthier.
The sooner you start to spin that wheel, the sooner
(07:25):
you climb into that virtuous circle, the better off you're
going to be going to be. Excuse me, I'm carrying
a little bit of a cold at the moment.
Speaker 2 (07:34):
Everybody is. Everybody is, but we say virtuous. Some people
may say self righteous, but it doesn't matter. It's about
sorting yourself out. It's your job.
Speaker 3 (07:42):
Yep, that's exactly right. And the sooner you start, the better.
I think. Fifty is it's kind of the age. It's
to wake up call age. And that's when people really
start thinking fifty to fifty five. They start thinking that
retirement isn't or that age of sixty five may not
(08:04):
necessary be retirement, or maybe not a complete and full retirement,
but that age sixty five is starting to look like
it's in sight, and that's when people start to stress.
I suppose you suppose you'd say, now you know, I mean,
I think that's it's good that people do wake up
and start doing it then, rather than leaving it for
(08:25):
another decade. But it would be an awful lot better
have got any younger listeners that they start as soon
as they possibly can, particularly with keV Saver, so that
you're picking up your employer contribution. So if you put
on three percent, it's soon going to be four percent,
then your employer is bound to match that, and that
(08:51):
means you're effectively getting one hundred percent return on day one.
Now that's fantastic. So you're you're three percents immediately turns
into six percent of your salary. And one of the
good things about keV Save is that it is illiquid.
That is, you can't take it back out again unless
it's for the purchaser of a first time. And there's
(09:14):
a few other things like severe health and severe financial
difficulty and so forth, but at this very difficult other
than that first time, to take it back out again.
And therefore whatever you put in their compoundent crystal start
to work on that and you will be a lot
better off.
Speaker 2 (09:32):
I know that. When I first started at the BC
inz And I was twenty two, twenty three years of age,
and they said, do you want to join our superannuation
scheme and I went no, I want the money for
myself right now and now with the benefit of age.
I look back and that well, that was a stupid decision.
But we also had a INZT super that was got
rid of by Rob Muldoon, so that disappeared. And so
(09:54):
the revelation of the introduction of kiwisaver meant that there
was a scheme there that everybody could take advantageob and
you could start doing that. And as soon as it
came about, I was in. Like Flynn, my partner has
been on private superannuation since she was twenty five, and
I sit there looking at what she's managed to build
up and it's just been absolutely brilliant. Yea, So the
(10:14):
younger you are, like I always say, and have already said,
it is your money. That said, once you've decided that
you're going to actually start the savings for your final third,
how should you do it? Should you be going for
fund aggressiveness? You know, or should you be saying, well,
(10:35):
you know it says this percentage, maybe I can actually
contribute eight percent or twelve percent or more. You know,
is there a ten percent rule? How should you approach it?
Should you approach it aggressively?
Speaker 3 (10:48):
Yes, you should. Most people, most young people, that old
twenty two year old self of yours Andrew should have
been invested in an aggressive or at least a growth fund,
so of a fund that's laden with shares and property
and not so much and fixed interest in cash. So
(11:10):
you should be providing you can handle the volatility you're
providing you can just watch the thing go up and
down without panicking and changing your settings. Then you ought
to be as aggressive as you possibly can when it
comes to putting extra Yes, you will be able to
(11:33):
be better off if you do, but you just need
to be very sure that you're not going to want
that extra money for anything else. That is, you're not
going to suddenly want to start a business, or you're
not going to get yourself into a bit of financial
trouble and need to pull some money out because you
can't do it in key resaver. So a lot of
people would have the key resaver going up and they'll
(11:56):
be contributing three percent, soon to be four percent into that,
picking up the employer contributions, picking up the little government
contribution that still exists. But then beside that almost as
a sidecar, if you like the vest and another fund,
and that other fund would be liquid. It may be
(12:17):
almost identical to the keep you Saving fund, but it
may even be with the same provider. But the big
difference is you would be able to get at the
money of something unexpected happened and you needed it.
Speaker 2 (12:28):
When it comes to planning for retirement, though, I'm having
I'm starting to track that way, and I'm getting pretty close.
And I have mates, you know, and we were talking.
I was doing to one friend who, due to all
sorts of circumstances, has ended up renting for the last
fifteen years, and he's now just into his sixties. And
we were at a funeral the other day, you know,
(12:50):
of a friend who had died at the age of
sixty three, and I said to him, I said to him,
you don't have your own house. You don't have the
security of your own roof at the moment, and when
you're thinking about those, you know, the final third you
have to think about illness, You have to think about impairment,
and you have to think about will I have a
(13:11):
roof over my head, will I have a bed underneath
my back? And will I have money to buy a cappuccino.
So there's a big old checklist that you really have
to go through. Isn't there to make sure that you
are ready for the future, which will not be as
liquid as you're present.
Speaker 3 (13:29):
No, that's right, And I do think one of the
best ideas is to do a little milk budget. So
pretend that you're no longer working. What does a what
does an ordinary day look like? What does an ordinary
week look like? What does an ordinary fortnight look like?
And then try to cost that out how much? And
that gives you an idea of how much you'll need.
(13:53):
One of the things that's happening, and it's happening in
space at the moment, is that people are getting to
age sixty five finding that they can't retired because they
simply don't have the savings put aside, so they're carrying
on working. So we've now got forty eight percent of
people aged between sixty five and sixty nine still working,
(14:18):
and the bulk of those I can't tell you the
exact number. But the bulk of them are working because
they need to, because they need the money. Now I'm
over sixty five and well over sixty five, but I'm
still working. I could retire, but I choose not to.
I actually get energy out of out of working, which
I know may sound a bit weird, but I do.
(14:42):
And so I've quite not justly and deliberately carried it,
carried on working even though I could retire if I
wanted to. But the bulk of people between sixty five
and sixty nine is forty nearly half near enough to
half of people in that age group are carrying on working.
In the bulk of them are doing it because they
(15:02):
need the money.
Speaker 2 (15:03):
Well, we actually start up. I talk it when we
talk about the changes to the governments as Kiwisaber plans.
You said, the person who feel most for the self employed,
and a lot of them are like tradees, and they're
like contrastors, and they do very physical work. And whenever
I do conversations about superannuation, they start talking about how
they've wrecked their body. You know, their knees are shot,
(15:23):
their arms are shot, their body is shot. They can't
do the work. That they've always done their whole life
and they don't feel that they can then pivot into
a new career. And so really those people who choose
those sorts of careers when they're young and they're bulletproof
should also be thinking you've got to put a part
aside for the day when you can't lift a hammer.
Speaker 3 (15:46):
Those people, especially don't argue Andrew, really need to be
thinking about socking enough aside for a decent tirement, because
they're simply not going to be able to carry on
sharing sheep or balling around on a roof, beang and
nails or whatever they're doing. Fortunately, the number of those
whose really heavy manual jobs are decreasing, but there's still
(16:10):
enough of them, and there's still enough on our sort
of age group who started off from their well, I
was going to say their twenties. In fact they're teens,
because they're just you know, they left school of fifteen
or sixteen, a lot of them, and they've been working
on a farm or working as a builder or working
as a sharer ever since, and it's very hard on
(16:33):
the body. It's one of the issues that when people
talk like I do about raising the age of new
Zealand superannuation that would need to be very careful of
as a society that we pick up those people who
simply cannot keep working for another couple of years.
Speaker 2 (16:51):
Well, yes, I was going to mention that later in
the program, because the big debate is there. I know that.
On Friday, Matthew Houghton wrote an article saying, you know,
SUPER has got to change. It's going to get older
and it may have to get less. We know that
the imposition on the government's accounts is enormous because of SUPER,
and we have this growing bubble of people that are
(17:11):
going through And every time I do talk back on this,
someone phones up and says, look, you know, I'm a laborer.
You know I must have it at sixty five because
I just cannot work. But that's obviously a threat, isn't it.
Speaker 3 (17:25):
Yes, and we've I don't know what the solution is.
Maybe it's a doctor's certificate or something. Look, I don't
know what the answer is, but we have to find
some way of picking those people up because I think,
and certainly the National Party's but policy is still to
raise the age of retirement from I think sixty five's
(17:48):
to sixty seven of course we've done that before. We
did that back in the nineties. We actually raised it
from age sixty to sixty five. Yep, and we did.
Speaker 2 (17:56):
It There was Jim Bolger, and he did it quick.
He didn't even a lot of these proposals are sixty
five to sixty seven over twenty years, So it's not
good of affect you if you're fifty eight, go what
they're touching my super But it will if you're thirty.
But that was over twenty years. Bolger did it like
in two.
Speaker 3 (18:14):
Yes, I think more than that.
Speaker 2 (18:16):
But he did it quick. He didn't. It's a big,
big change and it was a.
Speaker 3 (18:20):
Shot, yes, much quicker than what's being proposed. Now, okay, we'll.
Speaker 2 (18:25):
Ask you more about that a little bit later on.
This is Martin Howes, of course, financial writer no longer
an advisor, though he's still working even though he doesn't
have to because he can. The one thing about AI
it can replace us, Martin, but it can't replace someone
who digs a ditch, you know. So there's still going
(18:45):
to be a lot of those people around the place.
If you want to put a question to Martin about
the money for your retirement or any of those sorts
of questions about money at all, You can text us
ninety two ninety two. We would prefer you to phone
oh eight one hundred and eighty ten eighty. But Bob
sent it in a text says I'm retired, I don't
need my Kiwi saver, so it's still all in there.
Would would a term deposit be a better choice? Should
(19:07):
they pull it out of the key WE Saver and
started investing it in term deposits or something? Taking into
account is a very changeable world at the moment, Donald
Trump and tariffs and wars and all sorts of things.
What do you reckon?
Speaker 3 (19:22):
Well, it's very hard to answer Bob's question because I
need a lot more information about him and what other
assets he owns and what is life. But look he's
at RFN and how much he's spending and looking at
us a total overall thing. Personally, for most people, I
would keep the key saver going because the KEYV Saver
(19:43):
gives you a ready made fund which gives exposure through
to bonds and equities, shares, the commercial property and so forth,
and all of those things. Yes, they're all volatile, but
they do give much much better, better returns. So much
better than over time, much better than TERMB deposits. So
(20:07):
if he can stand the volatility and he's not going
to need the money for a few likely to need
the money for a few years, then with people who
are over sixty five with the a q saver funds,
they all of a suddenly changed to being liquid, that is,
you can draw them out at any time in the
whole all part. So I have I've kept my qpsaver
(20:31):
fun going and I use it for my health fund.
So I draw for the health funks I need, which
I needed a couple I was.
Speaker 2 (20:40):
Talking about preparing for your final days. Make sure you've
got to bed about all that, make sure you can
afford the doctor. So that's that is a genius idea.
Eight hundred ten eighty. If you like to have any
other conversations of money we are talking about in whores.
This is Smart Money on the Weekend Collective on News
Sorts THEREB it is five twenty seven. My Madrew Dickinson's
phone number is eight hundred and eighty ten eighty. Howes
(21:03):
is my special guest on smart Money. I've got a
question for you, Matton, and it comes from the text.
It comes from Shane, thank you for listening to the program, Shane,
and he says, hell a gen city thoughts on S
s R S S versus key savor For those who
don't know, S s R S S is the State
sector Retirement Saving Scheme, which was a voluntary at time.
It's saving scheme for the public sector employees. It's closed
(21:25):
these days, but if you if you got in early
in the old days, you can still contribute. It's managed
by providers like a MP. So your thoughts Martin on
S s R S S S S.
Speaker 3 (21:39):
It's a really difficult one. I'm sorry, Shane, and it's
not something I'm I'm well briefed on. I'm going to
say I don't have an opinion on that. I was
reading something about Marcus Aurelius, the Roman emperor, yesterday, i
think the day day before, and he said it's okay
not to have an opinion, and I think in this case,
(22:02):
I'll kick the touch and not have an opinion. Okay, Well,
we've been sorry about that, Shane.
Speaker 2 (22:08):
Yeah, I know. Well, it is a specific scheme with
specific qualifications to get into it and specific requirements. You
have to know all about that, and of course it's
now somewhat redundance, you know, it turned off. And that's
an interesting thing how many times we've actually had retirement
schemes and then somehow normally for political reasons, we've dropped
them for the sake of what I would say false economy.
Speaker 3 (22:33):
Yes, we had the one that Norman kirk Boughton in
nineteen seventy two, and some listeners would say that's very
ancient history at all, but to me, it's just like yesterday. Unfortunately,
Robert Muldoon won the following election and the very first
thing he did before even Parliament said was he got
(22:55):
rid of it. And people run calculations to show how
much money there would be in that now, and it's trillions.
It's it's a you know, we would all be we
would all be facing a really good, prosperous retirement if
that was still existent.
Speaker 2 (23:14):
People talk about Australia and their minerals, but I say
Australia and their super scheme meant that it was in
the hands of investors who then were advised to invest
in the country, and so that means that there's capital
available for all the entrepreneurs and the startups and the
people there to actually grow their businesses and we would
have had a far more diverse economy if we kept it.
(23:36):
But hey, twenty twenty hindsights is a terrible thing, is
it not? Noles and Napier. Again, this is a somewhat
technical question as well. Can we purchase government bonds in
New Zealand to then fund our retirement in New Zealand?
Speaker 3 (23:51):
Yeah we can. Indeed you can buy New Zealand government
bonds on me. We can either buy them when they
when they list, when they when they float, them as
they sell them, or you can buy them on the
secondary mark relatively easily through a sharebroker. I personally wouldn't
(24:11):
use government bonds to fund all of my retirement. I
would have some equities, some shares and commercial property in
the portfolio as well. It's all very well to say, well,
you know, New Zealand government bonds are very safe, and yes,
indeed they are. But inflation can rear it's likely head again,
(24:35):
as it has done in the last few years, and
in any event, New Zealand government bonds are likely to
be one of the lowest yielding investments that you could make,
simply because they are so safe. I think investors are
better to take on a bit more risk by buying
some equities, some shares, and some listed property funds, taking
(24:57):
a bit more risk but getting a better return.
Speaker 2 (25:00):
Yes, well, there we come into diversification of your retirement portfolios.
What are the best ways to do that?
Speaker 3 (25:08):
Well, one of the good things about Keep You Safe
is that almost all of the funds are diversified already.
So if you buy into most of them, there's a
little bit of doubt in my voice, and I'll come
back to that in a moment. If you buy into
most of them, you will already have the four main
asset classes, which are shares, listed property, fixed interest, and
(25:32):
cash or bank deposits. Now the proportion will change, and
that's where there's a bit of doubt in my voice.
If you brought into an aggressive fund, ninety percent of
that would be in shares and property, ten percent would
be in fixed interest in cash. That would be extremely volatile.
It would be up and it would be down. It would,
over long periods of time, give you the best returns,
(25:55):
but it would do a lot of leaping around and
getting those returns for you. But you know, you can
choose the level of risk that you want. You can
have an aggressive fund, you can a growth fund. You're
can have a balanced or conservative fund, and that will
dictate the either of turns that you get and be
the amount of volatility that the fund has. But any
(26:18):
of the funds, you know, even an aggressive fund, yes,
it will be almost all in shares and property, but
it won't be in just one company and one share
and one property. It will be it will still be
in five hundred different shares or five hundred different property
property types. So you're still getting you'd still get some dipracification,
(26:42):
even though you're it's going to be extremely volatile because
it's mostly in chairs.
Speaker 2 (26:48):
I'm going back to that that text we have for Bob,
who you know, called up and said, I don't need
my KEYI Saber, would be better for me to take
it out and put start putting it into term deposits.
And I recognize the answer that he gave to that,
and that KEYWI Saber is managed by professionals whose entire
lifetime and working life is to find the best investment,
and they're good and to diversify for you. So, but
(27:11):
if you decide to take over the control of your
own investments like that, like Bob putting everything in. He's
the one who then has to choose the term deposits.
He's the one who has to determine which one of
the four asset classes to go in. And do you
actually guarantee that you're any better than the Kiwi Saber
or any other superannuation providers.
Speaker 5 (27:29):
Yes.
Speaker 3 (27:30):
I was faced andrew by with that about four or
five years ago when I was shifting from Queen sand
Road lived for twenty years to christ Church, and I
examined every aspect of my finances, including my investments. Now,
I've managed my own personal investments since I was in
my mid twenties, and you know, it's near enoughter getting
(27:53):
on for fifty years. And when I had a good
heart look at that, I actually realized that I was
only an average investor. And that was because, you know,
a lot of my time was involved with clients presenting
climate there.
Speaker 2 (28:08):
You were great for the clients, but you were crap
for yourself. Yeah.
Speaker 3 (28:11):
The Copplers family is the poor a shot. So I
took my money and I've given it to professionals. They
spend all day, every day staring at their screens. I
don't think you want to do that. I travel a
bit now, and I don't want to pitch up on
France going rock climbing and have to look at my
(28:34):
portfolio before I head out the door. It's it's really
good to have handed that over. Somebody else does it,
and I think they get at least they get returns
that are at least as good as mine, and probably
accept better.
Speaker 2 (28:52):
And there are people who are also paid to hold
them to account because they have their own managers as well.
I go, well, you know your performance here is not
actually good enough, and they hold them to account and
again taking the hassle away from you. This is Martin Hawes.
We're taking your course in your text about your financial health.
I did mention the final third, and somebody has said,
(29:13):
if you're talking about retirement savings, are you suggesting that
we're all going to live to ninety? I mean no, no,
it's it's just a phrase i'd like to say. But
there is the final third, the twenty last summers that
you do really need to think about, and you need
to think about that in the first two thirds as well.
We've mentioned that before. Eight hundred and eighty ten eighty
is a number to the phone if you have a question.
For Martin or ninety two ninety two if you want
(29:36):
to send it in a text, but remember that has
a small cost involved in. Is that a good investment?
I'm Andrew Dickins. It is eighteen to six. I'm in
for Tim Beverte. He's back next weekend. My special guest
on Smart Money is Martin Hawes, a financial writer. And
got any new books out? Yes, I have?
Speaker 3 (29:54):
About or six weeks ago I had a book called
Retirement Ready came out and it's done. It's more than
six weeks ago, it's more like three months ago, and
it's done extremely well. It's sold very well, indeed, so
my publishers are very pleased with me.
Speaker 2 (30:13):
Good man, still working all these years later.
Speaker 3 (30:15):
Look at you go, Hey, one of the things Andrew
that you talked there about living to ninety, if you're
a sixty five year old woman living to this, listening
to this, then the chances are, you know, on average,
that person would live to about eighty seven or eighty eight.
(30:35):
So it's getting pretty close to ninety.
Speaker 2 (30:37):
And we're only getting better at staying a life. And
of course we are the new older people who are
coming through are even fitter and healthier than the new
older people. I read a fantastic article earlier this year
about just how fit and healthy our sixty and seventy
year olds are. They've lived virtuous lifestyles they learned earlier,
and they're keeping everything going, and they're doing weight training
(30:58):
and all sorts of stuff, and that will mean even
more longevity, which means even more costs when it comes
to maintaining super And we'll get to that question later.
So let's welcome to the pragon. Henry. Hello, Henry, Oh,
good evening.
Speaker 4 (31:11):
This is a really interesting topic. And actually I'm listening
as I'm doing my tax return for the year. A
bit of background. So I'm fifty three years old. We
have a freehold house need assets of about one point
six and investments. A question I'm constantly asking my investment
advisors is what's the number that I should be aiming for,
(31:33):
thinking I've got ten years left to work more or less?
What number is a good number to retire?
Speaker 3 (31:39):
It depends what you want in retirement. So if you
thought that you wanted one hundred thousand dollars a year
in retirement, and that's you know, that's not silly, then
if you had a five percent draw down rate. So
that means if you drew five percent of the initial
amount that you had, let's say that was two million dollars,
(32:01):
season you've grown you one point six to two million dollars.
If you do five percent out, that would be one
hundred thousand dollars From that two million dollars. You can
draw that one hundred thousand dollars out. According to the
figures that the actuaries have done, you could draw about
five percent of that out have one hundred thousand dollars
(32:21):
a year plus ends in super Now that one hundred
thousand dollars is after tax, but it does include running
down your capital so that when they do the numbers
that they're saying, you're not just spending the returns that
you're getting on your two million dollars, but you're also
spending a little bit of the capital each time you
(32:42):
draw some money out, and that runs it down. And
these things are usually worked out so that the money
would last about thirty years.
Speaker 2 (32:53):
Eighty three sound good to you, mate, But then after
eighty three, what are you going to do then and
go back to work?
Speaker 3 (33:01):
No, you'd probably use your house to give yourself some income,
you know, with a reverse inuity mortgage or one of
the other products that are available like that. I'm assuming Henry,
that you know you're going to carry on working, say
till sixty five, so that would mean thirty years would
take you through to ninety five, which should see you out.
(33:25):
One of the things one of the other things about
retirement income. There's some really fascinating things about retirement income.
But one of the obvious things that a lot of people,
even though it's obvious, people don't take account of it,
and that is that as you as you go through
retirement and your age, say you get into your late seventies,
(33:45):
maybe into your eighties, your expenditure starts to drop because
you can no longer travel the same as you did.
You're no longer going on ski weeks or any anything
like that. So you start to spend significantly less until
you get to those final year or two where it
might pop back up again because you may need some care.
Speaker 4 (34:06):
So you no longer have hungry teenagers living with the island,
which is probably.
Speaker 2 (34:11):
Exactly you no longer go out to dinner with mates
because the mates have passed on. You know, there's all
sorts of things. You know, it's a horrific. There's a
horrific reality to the whole thing. Henry, You've seem to
have reacted to all of this and stun shock. Are
you okay?
Speaker 4 (34:25):
No, Look, that was the answer broadly I was expecting.
I mean, I guess that the follow up question is,
I mean, so you've said an annual drawdout of about
one hundred grand, I mean that is that realistic? I mean,
we obviously very much want a choice lifestyle. We want
to do the traveling, Like, what is the number that
we should be thinking about for an annual expenditure? Is
it one hundred? Is one hundred and fifty? These are
(34:46):
questions that weirdly that the people that I pay to
look after our investments just never seem to be prepared
to answer.
Speaker 1 (34:52):
No.
Speaker 3 (34:53):
I think if there's one part of finance that you
are about your time planning that you do want to
do yourself or I really have to do yourself, it's
doing the budget. You need to sit down and figure
out what you lifestyle is going to be like and
what the budget for that is going to be. And
dub dub dot sorter dot org dot z has a
(35:15):
really good budget and tool and that will at least
prompt you to make sure you pick up all the categories.
You can have a very good life on New Zealand
on one hundred thousand dollars plus another thirty odd or
thirty thirty to forty odd coming from INSI super you're
going to have And a lot of this depends on
how much you're going to travel, because travel does soak
(35:38):
up a lot of income.
Speaker 2 (35:40):
Yeah, there we go, and thank you so much, Henry.
We've got Marton Hawes online and we're back after the break.
This is VIEUSTI. There be the Weekends Collective. Andrew Dickins
with Martin Hawes. We took the money and we've got
Jerry online. Jerry, Hello, you're on with Martin.
Speaker 5 (35:55):
Good evening Andrew and Martin. I've always heard many advice
shows about stocks, bonds, commercial property, land, all those sorts
of things. But when I think about things like professional
sports and professional musical entertainment, I never hear any advice
about investing in those businesses.
Speaker 2 (36:17):
And your question is are they good businesses?
Speaker 5 (36:21):
No, I know they're good businesses. In nineteen ninety five,
almost personally made ninety five million dollars.
Speaker 2 (36:29):
So do you have a musical enterprise that we can
invest in, Jerry or We're not quite sure about your
question there.
Speaker 5 (36:35):
My question is why is there no advice on how
to buy a stock in the music business or the
sports business.
Speaker 2 (36:44):
Well, I could give you a side answer on that,
because David Bowie and other rock and roll artists actually,
instead of releasing bonds, they actually bonded up the output,
which you could then buy a slice of it. Then
you get some of the capital that comes from future
licensing of those records. So the Bowie bond, I think
Springsteen's done a bond. These other people have done bond,
So I just hunted out and look for it if
you want, and check the returns and and and check
(37:08):
what the bond manager specifies. That is that about, right, Marton?
Speaker 4 (37:14):
Yeah?
Speaker 3 (37:14):
I think so. They've been quite a lot of artists here.
You correct me if I'm wrong. Who have they've sold
off their back list, their their playlist? I think even
the Beatles of.
Speaker 2 (37:26):
Beatles went a while back.
Speaker 3 (37:27):
Absolutely, I guess it's it's not really a main asset
class in the sense that shares are an asset class
or property as an asset class. It's instead it's instead
an industry within those categories, and it's they are to be.
To be honest, music and sports are not industries that
(37:51):
I know a lot about. I do know that you're
quite right that they have given extremely good returns. I
think you can buy small amounts of them as as
simply a small share. You know, you can buy one
or two shares or or something like that. If you
go out to the New York Stock Exchange. You won't
(38:12):
be able to buy them that I'm aware of in
New Zealand. Well, that is just simply because there are
no scale music, music businesses or sports businesses here that
are available. Or you could certainly do it on the US.
I'd say it would be something that you would You'd
need to know the industry. You need to know what's
(38:34):
going on, what is available, what is facale, how well
is that price and so forth? Or Jerry who just
go down to the corner, find a busker, give them
a hundred bucks and write a little contract and say,
I hope you turn out to be edshe and let's
see how that plays out.
Speaker 2 (38:50):
Thank you so much for your call. Quick question for
Emma says how important is home ownership in retirement? I
am fifty three years old. I haven't bought a new
home since I separated, and I know a number of
people like that from a previous relationship and the sale
of the family home. So now she's fifty three without
home ownership. How important is that?
Speaker 3 (39:11):
I think it's important. I think it's a lot better
to go into retirement owning a house.
Speaker 5 (39:16):
Now.
Speaker 3 (39:16):
That's not to say that the costs of owning a
house are insignificant, because you know, rates, insurance, maintenance and
so forth are quite significant, but they're not as large
as rents. And also in New Zealand, you can't usually
rent for the long term. There's no security of tenure
(39:37):
when you rent, and you don't, as your age, want
to be shoved from pillar to post, you know, told
by the land. Would you have to get out and
then move to another place and then have to have
to get out out of that. I would try, Emma,
to buy a house to go into retirement if I
possibly could.
Speaker 2 (39:54):
All right, And I'm seventy six years old with a
good size these portfolio over one point six billion plus
two freehold properties. But my son is keen for me
to invest in bitcoin thoughts.
Speaker 3 (40:05):
Well, it's not investing in bitcoin you're speculating on bitcoin.
I have no idea whether boocoin is going to go
up or go down. It's probably about a literally a
coin toss as to which it's going to be unless again,
you're extremely well informed, you and you know what it's
(40:26):
all about.
Speaker 2 (40:27):
Martin has been brilliant having you on and I thank
you so much for taking time out of your house
and also while you're a little bit crank again, you
know a little bit sick, so it's been lovely having
you on and can't wait to have you back on
on the program again. All the very very best, Thank
you very.
Speaker 3 (40:39):
Much, Andrew.
Speaker 2 (40:40):
And that brings us almost to the end of our program.
We have news and sport in just a few moments
of time. Have I got a little bit of Black
Sabbath to be played at this moment? Yeah, because last
night at Villa Park and Birmingham, Ozzy Osborne and Black
Sabbath did their final, final, final concert. They've done that before,
but they came back one more time and apparently the
reviews it was epic and it was extraordinary. So I'll
(41:03):
leave you with a little bit of Black Sabbaths. We
rock into our night. My name's Andrew Dickens. I'm back
on early edition tomorrow morning, so I'll see you at five,
won't I My thanks for producer Isaiah tell Up.
Speaker 1 (41:27):
For more from the Weekend Collective, listen live to neth
Talks It'd be weekends from three pm, or follow the
podcast on iHeartRadio.
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