John MacDonald: Planning for retirement in your 40s? Really?

What do you think someone in their 40s is thinking about right now?  

I can think of a few things, and I bet it’s not retirement. Even though we’re being told today that that’s what someone in their 40s should be thinking about. 

But I bet they’re not. 

I reckon if someone is in their 40s and they’re a parent with kids at school, they’ll be cursing about all the back-to-school costs. But they’ll probably also be loving the fact that the holidays are pretty much over. 

What else might people in their 40s be thinking about right now? 

Maybe, with it being January, they might be thinking about trying to get a new job this year. Some of them will be thinking about getting a job full-stop.  

If they’re in their 40s and they run a business, they’ll probably be hoping they can get through this year just like they got through last year. They might even be looking at their mates who have a job and get paid a salary and be thinking that working for someone else doesn’t actually look that bad after all. 

There will be people in their 40s dealing with relationship break-ups. Some will be moving on to the next one, blending families and all of that. 

They’re just some of the things that a person in their 40s might be thinking about right now. 

But do you think anyone in their 40s is thinking about their retirement? In fact, not just thinking about it, actually planning for it. How likely do you reckon that is? Very unlikely. 

But apparently they should be.   

That’s according to the author of a new report out today which says “oh you know how we’ve been telling you that you need to have a million bucks in the bank if you want to have a comfortable retirement? Well, you might not need that much after all.”  

In fact, you might even get away with having just $120,000 in the bank.  

That’s the “no frills” version of retirement, by the way. If you want the frills, you’re going to need a million.  

So where’s this thing today about young people proactively planning and preparing for their golden years coming from?  

It’s coming from Massey University’s financial education and research centre, which has looked at spending by people who are retired now, and they've worked out that $120,000 in the bank could be enough for a comfortable “no frills” retirement.  

They’ve found that retirees in urban areas spend less than retirees in provincial areas. But they pretty much put that down to things being more expensive in provincial areas and people having to drive more in provincial areas.  

But even though they’re saying that $120,000 might do it instead of a million, they say that some other form of income after the age of 65 is needed for a really comfortable retirement.  

And this is what Associate Professor Claire Matthews wants people in their 40s to be thinking about right now.  

She says the standard of living most people hope to have when they retire requires more than just NZ Super, and that requires long-term thinking and planning.  

But I think that kind of talk is unrealistic for the reasons I mentioned earlier. People in their 40s have got enough on their plate without thinking about retirement.  

Granted, we are light years ahead from where we were when I began my working life, now that we have KiwiSaver.  

In fact, I reckon people closer to my age —I’m 56— I reckon a lot of us are pretty distracted with life too and retirement isn’t really on our radar.  

Sure, I’m doing the KiwiSaver contributions each fortnight, but that’s it.  

And I’ll be totally honest with you, when it comes to my retirement, I’m probably preferring not to think about it.  

Which I know is pretty reckless.   

But it’s for the exact same reasons

Episode Transcript

Speaker 1 (00:06):
You're listening to the Canterbury Mornings podcast with John McDonald
from news talks'b.

Speaker 2 (00:13):
Right. Got a question for you. What do you think
someone in their forties is thinking about right now? This
might even be you, You might be in your forties.
What do you think someone in their forties is thinking
about right now? I can think of a few things,
but I'll tell you what. I bet it's not retirement,
even though we're being told today that that's what someone

(00:35):
in their forties should be thinking about. But I bet
they're not. I reckon. If someone's in their forties, and
let's say they're a parent with kids at school, they'll
be cursing about all the back to school costs, but
they'll probably also be loving the fact that the Holilads
are pretty much over right, admit it. What else might

(00:56):
people in their forties be thinking about? This is not
just people in their forties, or are parents anyone who's
in their forties. What else might they be thinking about? Well,
maybe with it being January, they might be thinking about
trying to get a new job this year. Some of
them will be thinking about getting a job full stop.
If they're in their forties and they run a business,

(01:19):
or they'll probably be hoping that they can get through
this year just like they scraped through last year. They
might even be looking at their mates who have a
job and get paid a salary and be thinking that
working for someone else thing doesn't actually look so bad
after all. Now there will be people on their forties
dealing with relationship breakups, some will be moving on to

(01:40):
the next one, blending families and all of that. They're
just some of the things that a person in their
forties might be thinking about right now. But do you
think any one of their forties is thinking about their
retirement in fact, not just thinking about it, actually planning
for it. How likely do you reckon?

Speaker 1 (02:00):
That?

Speaker 2 (02:00):
Is not very I say, well, if you are and
you forties, am I on the money here when I
say that retirement is probably the furthest thing from your
thoughts right now, because I bet it is. Or if
you know someone of their forties, how likely is it
that they're they're looking twenty odd years ahead from now?
Do you think? Well, they should be. Apparently I'm not

(02:25):
saying this to them, but apparently they should be. According
to the author of a new report out today which says, oh, hey,
you know how women tell you that you need to
have a million bucks in the bank if you want
to have a comfortable retirement. You know how, we've been
saying that, well, you might not need that much after all.
In fact, you might even get away with having just
one hundred and twenty thousand on the bank. That's, by

(02:47):
the way, that's the no frills version of retirement. By
the way, if you want the frills, I think you're
going to need the million bucks. So where has this
thing about young people proactively planning and preparing for their
golden years come from. It's coming from Massi University's Financial
Education and Research Center. And what it's done is it's

(03:08):
looked into spending by people who are retired now and
they've worked out that one hundred and twenty thousand in
the bank could be enough for a comfortable, no frills retirement.
They've found that retirees in urban areas spend less than
retirees in provincial areas. But they pretty much put that
down to things being more expensive in provincial areas, cheaper

(03:30):
in the city, people having to drive more in provincial areas,
all of that. But even though they're saying that one
hundred and twenty thousand in the bank might do it
instead of a million. They are saying that some other
form of income after the age of sixty five is
needed for a really comfortable retirement. And this is what
Associate Professor Clear Matthews wants people in their forties to

(03:53):
be thinking about right now. She says, the standard of
living most people hope to have when they retire. Count
me on this one hope to have when they retire.
It requires more than just New Zealand souper And she
says that requires long term thinking and planning. But I

(04:14):
think that's unrealistic. I'll be honest, you know, for the
reasons I mentioned earlier. People in their forties they've got
enough on their plate without thinking about retirement day. And granted,
you know, granted we are light years ahead from where
we were when I began my working life now that
we have Kiwisaver. In fact, I reckon people closer to

(04:35):
my age and I'm fifty six. I reckon a lot
of us pretty distracted with life and retirement isn't really
on our radar either. I'm not sure I'm doing the
KISAB contributions every fortnighte but that that's it. That's it.
I'm not to go into all the detail that Associate

(04:55):
Professor Matthews at Massive University thinks I should be going into,
and I'll be totally honest with you, totally honest. When
it comes to my retirement, I'm probably preferring not to
think about it head and the sand stuff, which I
knows some would think, maybe you think's pretty pretty reckless.
I know that Associate Professor Matthews definitely would, But it's

(05:19):
for the exact same reasons why I think someone in
their forties today won't be giving too much thought to
how life's going to be once they hit sixty five.
Reason for that simple It's called life and doing what
you have to do in the here and now.

Speaker 1 (05:35):
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