New Zealanders aren't saving enough for retirement

Personal Finance / news

New Zealanders are falling short on retirement savings – is it time to boost KiwiSaver contributions?

3rd Sep 24, 6:24pm by Ella Somers

New Zealanders are simply not saving enough for their retirement – so what’s the solution to this looming financial crisis?

The topic was debated by representatives from Fisher Funds, the Retirement Commission, Pie Funds and Milford Asset Management on Tuesday afternoon during a pre-conference session at the Financial Services Council’s conference which officially kicks off on Wednesday.

The focus of the session was around increasing employer KiwiSaver contributions, and how higher contribution rates from employers and KiwiSaver members could change the voluntary retirement savings scheme for the better.

The panel didn’t agree on everything but there was consensus that the minimum KiwiSaver contribution rate – which sits at 3% for both employees and employers – will not be enough for retirement.

The Retirement Commission’s Personal Finance Lead Tom Hartmann summed it up.

“Defaults are extremely powerful things, and when you set them at 3%, basically you’re sending a message to the entire country that that’s going to be enough, that’s going to do the trick,” he said.

“And we know that’s not the case for at least a certain percentage. In fact, the case can be made that higher income members should actually be doing a lot more.”

Since KiwiSaver was implemented in 2007, employers have been legally required to contribute 3% of their employee’s gross salary or wage to their employee’s KiwiSaver.

KiwiSaver members or employees on the other hand can choose to contribute 3%, 4%, 6%, 8%, or 10% of their before-tax pay.

Milford Asset Management’s Head of KiwiSaver Murray Harris said 90% of employers only contribute the default 3% to employee KiwiSavers – and most employees just match their employer’s contribution rate.

“So what’s the incentive to do more than that?”

He said incentives that could be provided were things like increasing the employer contribution rate incrementally over a period of time and a tax concession on contributions.

“Because without that, both employees and employers really have no other incentive,” he said.

Harris also suggested to get employers to “come to the party a bit more”, concessions could be provided to help them help their staff provision for their retirement.

But he added this would come as a cost to the Government – but it would be a short term cost for long term gain.

It’s long been thought that most employers in New Zealand would resist the idea but Pie Funds Chief Executive Ana-Marie Lockyer doesn’t think that’s the case.

She said during the panel that she had recently met with Commerce and Consumer Affairs Minister Andrew Bayly to discuss potential KiwiSaver changes.

Lockyer was told to come back after consulting with employers on what they thought about KiwiSaver adjustments – which she went and did.

“Employers are up for conversation around increases. They think it would be a far more nuanced conversation today than it was when KiwiSaver started,” she said.

“So if we agree it could be a good idea and we can handle the temporary increase, then we just need to find the right time in the economic cycle to implement the changes.”

Fisher Funds Chief Executive Simon Power said a lot was heard about it not being “the time” to be doing anything around changing contribution rates because NZ was in the middle of a cost of living crisis.

“And actually, it’s exactly the right time to do it,” he said. “And it’s exactly the right time to do it to start helping the public think about what might they do with any discretionary income that might come their way when the economic cycle turns,” he said.

Cash cow?

KiwiSaver was introduced in 2007 and is a voluntary savings scheme to encourage retirement savings.

According to equity research firm Morningstar which tracks KiwiSaver funds under management (FUM), total KiwiSaver FUM grew $3.5 billion in the June 2024 quarter to $110.8 billion.

The Financial Markets Authority’s 2023 KiwiSaver report found that more people are leaving money in their KiwiSaver accounts after turning 65 so their investments can continue to grow.

KiwiSaver members are able to access and withdraw from their KiwiSavers at any point once they turn 65. For people younger than 65, early withdrawals are possible but only for financial hardship and first home reasons.

Inland Revenue tracks monthly KiwiSaver withdrawals and the latest data for the month of July 2024 was publicly released in August.

IRD found 7,990 KiwiSaver members withdrew $191.3 million during the month of July via financial hardship and first home withdrawals.

Between January and July 2024, over $1 billion has been withdrawn from early KiwiSaver withdrawals.

Of that $1 billion figure, $890.4 million has been withdrawn for first homes and $201.8 million has been withdrawn because of financial hardship reasons.

The FMA’s 2023 report said KiwiSaver members put a net total of $6.5 billion into their accounts during 1st July 2022 to 30th June 2023, via deductions from salaries and wages, lump sums and other voluntary contributions.

“That is 15% down on the previous year, primarily due to a 62.6% fall in lump sum payments, to $832 million – a level last seen in 2018–19,” the FMA report said.

A growing older population

In 2022, Statistics NZ said the number of people living in NZ aged 65 years or older was likely to hit one million by 2028.

Beyond 2028, the number of people aged 65 or older could reach 1.3 million around 2040, and 1.5 million by the 2050s.

In 2028, 1 in 5 people in the population will be 65+ years according to Stats NZ and by the 2050s, the 65+ group could make up one-quarter of the population.

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63 Comments

by elmoboy12 | 3rd Sep 24, 6:47pm 1725346068

The Greens have it sorted. They will take the savings of those who have been frugal and saved, and give it all to those who never bother to save any money. That is their wealth tax policy, with a very low threshold including the family home.

by Yankiwi | 3rd Sep 24, 6:56pm 1725346618

Nice comment, although the /sarc is noted.

I struggle with the concept of rewarding the spendthrifts, and penalizing the financially prudent. The proponents of taxing capital (not to be confused with taxing capital gains) are strongly penalizing the financially prudent people. I am in strong favor of a universal capital gains tax (for realized capital gains), which should have zero exceptions, including when one sells ones primary residence. I am also strongly objecting to taxing capital, as this is a disincentive for saving for retirement.

by Palmtree08 | 3rd Sep 24, 7:51pm 1725349900

So you're good with being forced to borrow more when you sell your family home and try buying like for like? I guess turnover may drop, which would be good.

by Solid_Granite | 3rd Sep 24, 8:07pm 1725350829

Since when did this entitled mentality arise that once you own a home you have the right to swap it for any other home largely free of charge....

How about if you want a new home you must pay the price for it.

by kiwikidsnz | 3rd Sep 24, 8:11pm 1725351102

"Since when...?" A millenia or two ago

cf my comment below

by Mystery | 8th Sep 24, 3:45pm 1725767119

Even now you can't swap like for like without losing some money in the process. There is the R.E. agent's fees to pay, plus lawyer's fees, etc. Add CGT to that and it will be much harder to buy "like for like".

by Jamin | 8th Sep 24, 5:44pm 1725774267

We all need to think of the large array of potential situations someone may need switch homes, when assessing a potential tax.

I saw a situation where my mother in law got very sick. My father in law had to quickly sell the 3 story family home and buy one al on one story, to suit her new mobility.

If a capital gains tax was in place then on the family home, then they would have not have been able to afford to buy an equal but single storey house in the same city they had lived their whole lives.

by interesting1234 | 10th Sep 24, 9:02am 1725915733

f a capital gains tax was in place then on the family home, then they would have not have been able to afford to buy an equal but single storey house in the same city they had lived their whole lives.

Please explain. If there is CGT then all houses are impacted the same in terms of capital gain, therefore, not withstanding different property types and locations may increase or decrease in value differently, I'm curious as to why you feel they would somehow have been priced out of their own city?

by kiwikidsnz | 3rd Sep 24, 8:09pm 1725350987

"Primary residence" CGT

There is no real "gain". It's just another envy tax proposal to clip the ticket on families needs & housing changes throughout their lifetimes.

It's the same home with the same market value relative to others. Money is simply the medium of exchange & monetary price changes reflect the re/devaluation of money for reasons outside the homeowners control.

by Solid_Granite | 4th Sep 24, 12:44pm 1725410694

again, how about you pay off your own home then go from there. If you want flexibility in your life then rent.

by interesting1234 | 4th Sep 24, 8:58am 1725397095

I struggle with the concept of rewarding the spendthrifts, and penalizing the financially prudent.

While there has to be a balance, there is also compounding factors at play such as generational wealth. Likely the #1 way to get rich is to be born to wealthy parents and grow up being given an education at home around money and wealth, as well as inheriting this for one's parents by means of inheritance or financial assistance, say, to purchase a home. So many don't have this luxury, which is why we have a progressive tax system. While I don't agree with a wealth tax, when looking historically, there has always been a small number of very wealthy individuals and the majority live far far below this standard of living. Ensuring wealth doesn't accumulate too heavily at the top is what has afforded the middle class to gain a footing in society.

by Redcastle | 4th Sep 24, 12:48pm 1725410880

But you've just contradicted yourself. If you don't like the idea of 'rewarding the spendthrifts, and penalizing the financially prudent', why are you in favour of more tax, in the form of a universal CGT, which is simply a transfer mechanism to do what you disagree with.

by jack_gibbons | 3rd Sep 24, 7:53pm 1725349982

Inelegant, but a much better plan than just making the remaining workers pay up which is what will happen without some other plan.

by Azimuth | 3rd Sep 24, 8:56pm 1725353762

You forgot the bit about punishing those who work hard in favour of all the envious silly lazy bum-bums.

by pacifica | 4th Sep 24, 3:02am 1725375768

Yeah those lazy speculative landlords who frequently run overpriced hovels are completely a scourge affecting the wellbeing of all communities in NZ. Following that the lazy silly bums who think they are entitled to a benefit simply because they had a birthday and not because of an actual need like being unable to work, temporary losing work or being a medical carer.

But I guess in your eyes the only thing holding back a person with ALS so bad they need assistance to drink, sit and poop is their attitude, and not, say not being able to physically go a workplace for a lazy job like yours or move their arms & legs. All those kids denied equitable language & maths education, who cannot be in public unaided without support as well are just too lazy eh, not that no employer would hire them for any role even those that are safe WFH roles.

I dare you to sustain a severe brain injury from a fall, lose all your short term memory, lose your ability to read & do basic maths, break your neck and find a job without any ACC support. Or even find housing with no income and no savings. I doubt you have the stomach for a life without functional abilities that others expect and years of employment denials. My bet is you kill yourself in that life while homeless in less then a couple of years. But then you could always surprise us and learn something along the way.

In case you did not realize it the resilience and hard work is not that of sitting in an cushy office job 9-5 where you can fail upwards or get born during a different decade when housing was affordable & there were multiple govt grants. There are numerous levels of hard but until I see you actually face real struggles in your life I sincerely doubt you can even handle soft work and I doubt you will be able to face up to what real trauma and physical difficulty & challenges in life is.

by RookieInvestor | 4th Sep 24, 7:55am 1725393340

finally someone in reality

by ChrisOfNoFame | 4th Sep 24, 11:45am 1725407143

Ah Elmoboy, true to type. Deflect. Deflect. Deflect.

The Green's aren't part of the government. Why even mention them?

Oh, right. To draw attention away from the absence of leadership from who actually are the government !!!!

by Let me be Frank | 3rd Sep 24, 7:12pm 1725347526

"The Dow Jones did not return to its peak close of September 3, 1929, for 25 years, until November 23, 1954.^[28]^[29]^[30] "

^{https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929}

^{It aint a panacea...but the advocates will do well out of fees.}

by c17n | 9th Sep 24, 2:45pm 1725849913

I hope you haven't been sitting on the sidelines in fear of the drop while missing the much larger upside.

https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart

by Noncents | 3rd Sep 24, 10:45pm 1725360333

Aren't or Can't?

by pacifica | 4th Sep 24, 2:41am 1725374504

The later. The only ones who think kiwisaver is an answer to poverty in old age are those who are rich and entitled to start who have never experienced poverty and would not know how to manage if they even were homeless for a month.

The truth most poor people don't have a PAYE income. Most people struggling to save for retirement and live in retirement don't have housing they own. Most people struggling to save at all don't have an income that can afford even a GP visit & adequate food to prevent early disablement from disease or illness prior to retirement.

The abusive and harmful attitudes of the author OP are noted though. The continual punching down while denying that those in poverty need support now not at 65, that they don't have enough income to save and are often denied any housing if they have over 5k in savings is not lost on those who know NZ stats and policies. I guess reading basic statistics reports and learning about how the poor live is something beyond them and their world view. After all those dirty poor people just need to pull their socks up and stop being lazy eh /s.

by sadr001 | 5th Sep 24, 6:15pm 1725516947

If you have over 5k of savings, doesn’t putting it in kiwisaver exclude it from benefit considerations.

by pacifica | 4th Sep 24, 3:38am 1725377939

Nah it is not that it is difficult for employers.

Since many of the low income jobs are employers cutting their contribution out from employee wages it is easy with the higher contribution rate (and less in pocket for the employees). Or if you are paying on top of wages just withhold pay increases by inflation (which most companies and govt departments do already see healthcare). Or you could restructure your human resources *cough fire and rehire employees* with a lower pay rate (often less then living needs) to make up for the difference. Or even restructure how commission based pay is awarded. Also keeps them hungry for overtime eh like those nurses who are so tired they cannot even think or do anything about how bad and toxic the work environments are.

[In case you did not realize it these are practices in many large and small companies, often working in essential roles].

The biggest difficulty I have found with increasing superannuation rates is with the pay software where payroll programs often cannot manage line items like custom superannuation rates per employee in a single field by employee or for the different superannuation pay methods. MYOB for instance has a god awful nightmare to setup superannuation pay types per each new employee & must be applied each pay cycle or the limited drop downs that miss the mark and ignore the different superannuation pay methods, and Xero is, shudder a broken system that never even can account for holidays being worked or different working hours on different days, etc (don't get me started on the others). Even if an employee chose to dedicate 50% of their wage to kiwisaver the difficulty is not the employer contributions part or even the remaining pay calculations, but just trying to setup the kiwisaver payments in a payroll system that is not designed to manage anything but the vanilla case.

Some days you want to take the tech and the cheap ass permanently ignorant and cognitively challenged broken form designers & managers for them, wack them with their own keyboards, then fix the code yourself.

It sounds more like larger employers & these advisors are just pulling the leg of govt for a bit more free money to go into their pigs trough.

"Harris also suggested to get employers to 'come to the party a bit more', concessions could be provided to help them help their staff provision for their retirement.

But he added this would come as a cost to the Government – but it would be a short term cost for long term gain.

It’s long been thought that most employers in New Zealand would resist the idea but Pie Funds Chief Executive Ana-Marie Lockyer doesn’t think that’s the case. "

Sure payroll systems take a time to set up and manage but that is what an accountant or HR are for. If you are an owner of a business and also performing those roles the time it takes to change a 3% to another fixed default drop down amount is not as onerous as it is to setup superannuation per employee in the first place. As I stated once superannuation payments are set, changing the default value is trivial. It is the inability of payroll systems to cater for different work periods, holidays, changing employee hours or pay rates during a year, or different superannuation payments outside of vanilla which is always going to be faced regardless of what a default percentage is.

by Taubin | 4th Sep 24, 6:53am 1725389594

The average person is being squeezed from all sides and can barely afford food and housing as is. Is it any surprise they can't find more to stick away for retirement? Especially when one broken down car, or other unseen event wipes out most of their savings. It's not even "the poors" at this point, it's the average person/family.

by Hardly | 4th Sep 24, 7:49am 1725392958

It was time to raise contributions 10 years ago.

by Let me be Frank | 4th Sep 24, 7:55am 1725393301

Would an even further overinflated equities market solve any of our retirement problems?...and if so, how?

by Jamin | 8th Sep 24, 5:54pm 1725774863

Of course. A larger return and more money in retirement.

by ChrisOfNoFame | 4th Sep 24, 11:52am 1725407539

10 years ago?

Didn't the wonderfully astute National Government suspend all contributions to the Super Fund and miss out on the massive stock gains post the GFC? Why yes. It was.

Why anyone thinks they are good with money is beyond me.

The National Party has been in power for longer than any other party in NZ for generations now! And yet we're in a mess. Put two and two together people.

by lost_ cause | 4th Sep 24, 2:10pm 1725415814

'The National Party has been in power for longer than any other party in NZ for generations now!'

I don't think too many of us have checked, but I have ...... and yes they definitely have.

by KH | 4th Sep 24, 7:58am 1725393481

Yep. Time for universal Kiwisaver and contributions to lift one percent a year.

National Super can't last. It will break, and poor people will starve.

Time we realized there is no magic money machine. There are not enough people to pay for those in need.

by Jamin | 8th Sep 24, 6:01pm 1725775268

Yip, universal kiwi save is long overdue.

Ramping up and down minimum contributions could also act as another lever to the RBNZ on top of the OCR.

imagine, when the RBNZ takes money out of the economy, rather than it just be given to the big four banks via raising the OCR. Instead it is tucked away for our future retirement by raising the minimum kiwi saver contributions.

by KH | 4th Sep 24, 8:06am 1725393979

No taxpayer subsidies for Kiwisaver. And no tax on Kiwisaver either. No tax at entry, during or exit. EEE.

by M0ralHazard | 4th Sep 24, 8:16am 1725394587

There is no incentive to put in more than your employer match. If you want to save more fore retirement, then you are better to put it in a non-kiwisaver managed fund. Then at least you can withdraw it whenever you want.

by FCM | 4th Sep 24, 8:55am 1725396954

This is the fundamental issue with KS. We do both as you suggest, reason why, is we worked out a long time ok, if I lose my job or get sick you have basically got to be bankrupt to get money out of KS, so why put 10-15% of your savings in here as if you need it for a rainy day then it has basically got to be a biblical storm event. If you could access it easily to pay the mortgage payments (i.e part of a retirement plan should be shelter) if you having cashflow issues at sometime before you are 65 then many probably would be a bit more in.

by Jamin | 8th Sep 24, 6:03pm 1725775429

Yip, this is it in a nutshell.

If you want kiwis to contribute more. Raise the employer contributions. or there is no incentive.

by huttman | 4th Sep 24, 8:52am 1725396746

The topic was debated by representatives from Fisher Funds, the Retirement Commission, Pie Funds and Milford Asset Management on Tuesday afternoon

this sentence hurt my brain. Fisher funds and Milford funds are pie funds.

by c17n | 9th Sep 24, 2:48pm 1725850114

They are PIE funds, but they're not PIE Funds. Blame these guys https://www.piefunds.co.nz/

by Weld | 4th Sep 24, 8:57am 1725397043

Newspaper articles on retirement in New Zealand will say something like "you need savings of $___ to have a "comfortable" retirement. The problem is these articles never state whether or not that "savings" includes your unencumbered residence.

Let's say you own your own dwelling (no mortgage) and you live with your spouse, how much savings would you need to have that "comfortable" (i.e., not bare-bones budget) lifestyle?

Of course, "comfortable" is subjective, but what would you consider to be the savings required, on the assumption that you and your spouse will live in retirement for 25 years before death at 90 years and you want to leave the capital to your children?

by FCM | 4th Sep 24, 9:37am 1725399448

Had this conversation with someone other day..said he needed 2 million so could live of the dividends....he has two kids both A##holes..said so then you leave those two kids the house and 2 million after how they treated you..told him work it out on a spreadsheet and just leave them the house, and you won't need 2 million.

Did'nt even bring up the fact that most retirement fund managers think we will all live to 90. Ages of Funerals I have been too in last 2 years 18, 44, 55, 58, 71.

Life's about balance

by interesting1234 | 10th Sep 24, 9:09am 1725916166

Funerals I have been too in last 2 years 18, 44, 55, 58, 71.

Life's about balance

Something so many deny or forget. Dementia is on the rise, cancer will likely continue to be on the rise with the level of processed foods infiltrating our diets, and nobody knows where they stand in terms of the genetic lottery. Some get arthritic spines in their 30's by no fault of their own, others may have a heart attack at 49 and be fit as a fiddle. I don't plan to live to 85-90 and if I get there, I'd prefer to have the legal option to go my own way with dignity after arranging my affairs. Less trauma for the family and a good way to go with one's head held high.

by redcows1 | 4th Sep 24, 10:58am 1725404289

It seems that figure of $X is set really high so as to incentivise individuals to go " gee I must save harder to reach that goal". Reality is probably 99% of those it is aimed at look and realize it's so out of whack with reality they won't even bother.

My reality is I'll be working to survive untill I die. I stuffed up, bought and sold at wrong times along with other financial decisions so kiwisaver won't in anyway cut the mustard.

by ChrisOfNoFame | 4th Sep 24, 11:56am 1725407782

"Newspaper articles on retirement in New Zealand will say something like "you need savings of $___ to have a "comfortable" retirement. The problem is these articles never state whether or not that "savings" includes your unencumbered residence. "

Say what? Most I've read do make this distinction.

Oh. I see. You only read the headlines, right?

by Weld | 4th Sep 24, 12:25pm 1725409504

As an example, here's a typical article in which the amount of savings is calculated, but no mention of whether you will rent or not is included. How much do I need to retire in New Zealand? - MAS

Look at the typical rent for a 2-bedroom flat in Auckland and you will need at least $550 to feed it weekly. That's a $28,600 per annum and tenfold that over the course of a decade (ignoring rent increases).

by ChrisOfNoFame | 4th Sep 24, 1:20pm 1725412834

LOL. A "typical article"? You can't be serious!

It's a one line comment from an insurance company flogging its products.

It does however reference a sensible study from Massey University from where "typical article" cherry-picked your quoted one liner. Should you read the Massey paper, take careful note on how you should interpret the numbers. And let's not forget those numbers are now two years out of date and before a serious bout of inflation.

by Weld | 4th Sep 24, 2:47pm 1725418061

Here's an article from Newshub. It gives savings figures for urban and rural settings, but it doesn't discuss whether one is renting or living in one's own home. Cost of living: How much you need to live comfortably in retirement | Newshub

by Blessed Cheesemaker | 4th Sep 24, 12:19pm 1725409181

Fix the incentives and you'll fix the problem.

Compare us to our cousins across the ditch - 12% mandatory EMPLOYER contribution on top of base salary/wages, without the worker having to contribute an additional cent. However, there's an incentive for the worker to top up with voluntary contributions/salary sacrifice since it's taxed at 15% instead of their marginal tax rate (Up to a cap of $27,500/year)

Coincidentally - changes to Kiwisaver contributions - say, increasing employer match to 6% - was something completely within the government's remit that would have helped curb inflation, boosted investment into more productive areas of the economy than housing, and curbed NZ's over-reliance on its increasingly unaffordable superannuation scheme. With an absolute majority in Government, Labour could have easily pushed this through. Cullen must have been spinning in his grave with how little they achieved.

by Let me be Frank | 4th Sep 24, 6:03pm 1725429814

And yet Australia face the same problems with retirement as us ...perhaps at a slightly reduced level, and their retirement age is 67. Inflated equity values are of no use if that same mandatory savings/investment fuels asset bubbles and service inflation....nevermind that the market is failing to deliver the required services or the looming liquidity issue with those overinflated assets.

Lets call it what it is...a tax to enable ongoing support of the ponzi.

We would be better served to pay that tax to support public services that the retired need.

by speckles | 5th Sep 24, 3:32pm 1725507154

The sounds bites that mean very little.

Employer contributions in our low competitive markets would simply be increase in cost structured passed on in retail price. So non-inflationary...not likely. Most KiwiSaver funds are just going into the secondary equity markets, so show how it actually goes into productive investment.

Hardly an enterprise economy to invest into to start with in NZ...

For the record, it can clearly be shown the super scheme can be made to be affordable, a few policy changes can achieve that from taxation policy, expenditure priorities and final delivery.

The above is what we hear without any critical analysis... park your agenda and think about it. It is certain no in accordance with establish wisdom.

by Redcastle | 4th Sep 24, 12:53pm 1725411225

There may be many reasons why people don't save more, but the most obvious one IMO, is the cost of living. A very big barrier to saving is tax. Too many people expect to receive payments from the state to prop up their lifestyle choices.

If the Govt forces employers to pay more into people's kiwisaver schemes, it adds to their cost of business unless there is a corresponding productivity benefit.

by averagejoe | 4th Sep 24, 1:52pm 1725414767

I don't see the issue. If the first thing you do in your life is save 10,000 bucks and invest it properly (by age 20), you will end up with about 640K when you retire (without saving anything else again, and investing the returns). It's just so simple. Forgo the boy racer car or whatever, just get started. I started early, and have about 1.5m, excluding my house currently, and I have about 4 more doubling cycles left, so potentially I could end up with 24m to retire on (being next doubling to 3, next to 6, next to 12, and next to 24). This is assuming I never save anything again and get zero inheritance. I started with nothing and was saving 500 per month when I was 21. A bit of personal responsibility is needed here. It's a bit rich getting into your 40s and 50s and then blaming everyone else because you did nothing.

by talking sense | 4th Sep 24, 3:24pm 1725420242

"f the first thing you do in your life is save 10,000 bucks and invest it properly (by age 20), you will end up with about 640K when you retire (without saving anything else again, and investing the returns). It's just so simple"

The future aint the past.

You arent aware those doubling cycles require a corresponding energy burn supporting them.

Which means they aint going to happen without hyperinflation

by averagejoe | 4th Sep 24, 3:35pm 1725420938

I thought rule of thumb is property doubles in value every 7 years. I don't invest in property by the rule is similar. I'd be inclined to put the 10000 away and lets it do it's thing. It will work out, even if you don't think so, but, in the event it doesn't. then that is what we have national super for. PS: The seven year doubling cycle is not out of the ordinary and does not required hyper inflation. It just requires good management and patience and time (time being most important).

by interesting1234 | 10th Sep 24, 9:18am 1725916718

Perhaps have a look into the reasons for the housing market having such a boom for mainly the last 30 years. There are plenty out there who thought shares were the bees knees through the 80's until they lost it all, and saw their houses drastically drop in value as well if they managed to keep it. As mentioned previously, the past is not a guarantee of the future, otherwise you subscribe to confirmation bias. Personal responsibility is a definite requirement as you say, and prudence, however there are worlds of opportunities to invest in an associated risks. I once met a young German travelling in Latin America who made thousands daily on oil futures, interesting bloke, and then you have the bizarre situation of teenagers and those in their early 20;s at the time who got on to BTC before the big boom and made plenty.

by Mystery | 8th Sep 24, 4:08pm 1725768519

That's interesting @averagejoe. So you have 4 'doubling cycles' left until you retire. That's 40 years, let's say. Retirement is at 65. This presumes that you are roughly 25 years old now? For someone who started with nothing and by the age of 25 has amassed 1.5 million + their own house on top of that, that it extraordinary! You can't compare yourself to others because you are one of those people for whom the stars must have lined up just right and you had the luck of having the right genes, mentality, opportunity, circumstances, (help maybe?), and hard work of course, etc. without even realising how lucky you are.

I will not be surprised if as many people win jackpot lotto around the world as the number of people who start with nothing and gain 1.5milNZD + their own house by age 25.

Lots of assumptions in my reply of course. Still, good on you for being a successful saver/investor. Keep it up.

by averagejoe | 8th Sep 24, 7:52pm 1725781947

Doubling cycle is 7 years. My last two doubling cycles have taken 12 years, so six for each, and it’s been more or less like that since the start. If you are contributing funds and earning returns, the double cycles are much quicker.

by Mystery | 8th Sep 24, 8:52pm 1725785527

7 years for doubling cycles is pretty optimistic in my investing experience. Usually they say that for an investment to double every 10 years it needs to go up by 7% p/a. At first I thought that maybe you are confusing 7% per annum with '7 years doubling on average'? But you did say that you have personally seen a doubling of your portfolio every 6 years. So good on you, that's awesome!:)

by averagejoe | 8th Sep 24, 9:10pm 1725786604

Its compounding interest. If for example you have 1 million dollars, and you manage a 10% return on average (capital plus dividends) and you contribute say 5K per month, after 7 years your balance would be 2.5 million, so you would have earned just over 1 million and contributed a further 420,000 to your fund. Obviously your ongoing contribution becomes less relevant over time as the fund value becomes higher.

by Mystery | 9th Sep 24, 3:12pm 1725851536

That makes sense, with monthly savings contributions+dividends included, etc. In fact, having had a look at my finances after our chat, my net worth seems to have also doubled twice in the past 12 years (roughly) and has been doubling at a faster rate prior to that time (due to smaller amounts obviously). So you were correct that it's quite possible. Hard work/discipline and a frugal lifestyle definitely helped.

by averagejoe | 9th Sep 24, 8:57pm 1725872223

Well done. I don’t know how old you are, but stick with it and you will be sweet in years to come.

by WellingtonInvestor | 5th Sep 24, 8:20pm 1725524405

Also the Greens policy probably not inflation adjusted, so each year more and more people paying it

by TheWriter | 8th Sep 24, 8:22am 1725740561

Bizarre to read that Kiwis don't save enough for retirement. In another article here you read that labour plans on taxing mums & dads for their rental higher than other wages. Those mums & dads work their weekends on house repairs when others have pleasure time. They do this to finally have pleasure time when they retire but obviously labour (& greens) want to take the hard earned retirement funds from them.

So, how about incentising saving for retirement rather than punishing?

Then I'm sure more Kiwis would be willing to save for their retirement!

by Malcolm Menzies | 8th Sep 24, 8:08pm 1725782920

This article begins with the assertion that New Zealanders are simply not saving enough for their retirement. What’s the evidence for that? It’s not sufficient to consider KiwiSaver balances only, as people also save in bank accounts, other managed funds, their houses, businesses, etc. Comprehensive and continual research is needed to establish the true situation.

The foundation of our retirement income system is New Zealand Super (not mentioned, except in the comments) and NZS depends on us having a strong economy. Before requiring increased KS contributions, the potential economic impacts of an additional tax on labour would need to be considered. Also, tax incentives were abolished in the late 1980s for good reasons. Be careful what you wish for.

Ana-Marie Lockyer consulted with employers – how many? Which ones? A representative survey is needed to give more credible results. If employers are “up for a conversation”, they could have one as part of the independent 2025 review of retirement income policies, to be run by the Office of the Retirement Commissioner. This would be better than directly lobbying the Minister about changes to KiwiSaver, in isolation from the rest of the (highly complex) retirement income system.

by Wrong John | 10th Sep 24, 5:27pm 1725946020

Saving is hard. Saving for retirement is even harder. I failed at both for many years & finally gave up [on both] when I turned 50. But all was not lost. We still had the business & it started to work. In fact, really well in places. I suppose we had 15 good years before covid killed our momentum. Buggar. Anyhow, we continued on & still do. Two of the kids want to work in the business. Helayluyah. We're still in the game. Since I stopped I have been ''paid'' over a mill gross, from the business. Even the grandkids want in on the action. That's a double halayluyah. Mrs WJ is still doing the books. Bless her. Surrounded by kids & grandkids, she can't believe her luck, especially when talking with her friends, many of whom have to board a plane to do that. So what's my point? Never, ever, ever, ever give up. And yes, you are right, you have heard that before from somewhere.