How should millennials be planning for their retirement when they can't see beyond their hefty student loans and high-sky property prices? Diane Maxwell gives her two cents

How should millennials be planning for their retirement when they can't see beyond their hefty student loans and high-sky property prices? Diane Maxwell gives her two cents

The Retirement Commissioner Diane Maxwell says getting on the property ladder is “the single best thing you can do for your retirement”.

She “fully supports” young people taking money out of their KiwiSaver for their first home, as paying down a mortgage encourages them to put money toward a valuable asset, rather than blowing it on things they don’t need.

Talking to’s Jen​ée Tibshraeny about the difficulties young people face saving for retirement when they’re struggling to pay their student loans and save for a first home, she says:

“For young people at the moment in that low interest rate environment; if they can cobble together a deposit, if they can get themselves onto that ladder, if they can pull out their KiwiSaver money to put in, they can start down that path.”

Maxwell recognises this isn’t a “comfortable” journey, with house prices, particularly in Auckland, miles above household incomes.  

“The thing about paying a mortgage down is it’s a painful discipline, but it sucks the money out of your pay packet, and it sticks it into an asset in quite a brutal way. And that’s a good thing.

“If it’s not sucking that money out… then what we’re seeing is where it goes is an extra bottle of wine, an extra pair of shoes…”

“Reaching retirement mortgage free is probably the best thing you can do.”

Maxwell says diversification is still key when planning for retirement.

“You don’t want to put all your eggs in one basket. Nobody should ever say ‘investing in property is my only way to go’.”

She warns people shouldn’t be prompted by our low interest rate environment, which is great for borrowers and bad for savers, to start chasing risky investments, even if it means getting on the property ladder.

Leaving high school: Do young people know what they’re in for when they start study or full-time work?

Taking things back a step, Maxwell notes you can do a lot of damage to your finances between the ages of 16 and 24.

Whether it’s borrowing for a car, moving out of home or forking out for university, she says people can easily reach their early 20s with a lot of debt stacked up.

“If you add the $14 billion in student debt on top of that, people can enter their working lives with a lot of debt behind them.”

She says schools, tertiary providers and corporates are doing increasing amounts to educate school leavers about their career options.

They’re working particularly well with young Maori and Pacific students, with banks even running open days to encourage this demographic to consider entering their industry.

Yet Maxwell is worried we’re still stuck in the dark ages, and young women are being discouraged by their families from entering previously male-dominated, high-earning careers.

She’s noticed a number still wanting to enter “care professions” like hairdressing and air-hostessing.

“There’s nothing wrong with any of those professions, but it means we still have women reaching retirement with so much less because they’re earning so much less along the way.

“I’m trying to encourage young girls to say, ‘what do I want out of life?’ ‘What am I going to earn?’ ‘What kind of lifestyle is that going to bring me?’”

Leaving home: How is NZ being affected by young people delaying becoming finically independent from their parents?

Maxwell is concerned that like many Europeans, Americans, Brits and Aussies, New Zealanders in their 20s can’t afford to leave home, so they’re only having children later in life.

“What we don’t need is a reduction in people having babies, because it’s going to exacerbate the aging population.

“Our birth rate is too low already. In New Zealand it’s 1.9. The replacement rate for a population is 2.1.

“The fact that people are going to be sitting around with mum and dad until their late 20s and not going out and getting into relationships, or getting married and setting up a home, is actually going to bite us further down the track.”

While millennials can expect to have a bed at their parents’ homes until they’re 30, Maxwell says they shouldn’t expect a big inheritance when their parents pass.

“If parents are retired for 30 years, they may actually burn through some of the equity in their property, they may burn through their savings in a rest home, and actually what you’re inheriting may be a lot less.”

Getting cash fast: Do financial institutions need to take more responsibility lending to indebted young people?

Maxwell doesn’t stay up at night worrying about young people with credit card debt, but is very concerned about those with high interest, second, third and fourth tier loans.

“Banks have quite stringent credit risk criteria. If they think you’re not going to pay it back, they’re far less likely to lend it.”

She doesn’t doubt that credit card debt is problematic as you incur high interest (17-22%). Yet the issue becomes really serious when you’re paying up to 50% interest to buy stuff that doesn’t last long, like a car or a stereo.

The longevity of KiwiSaver: Will KiwiSaver deliver in 30 or 40 years’ time when millennials retire?

Maxwell admits that “anything you do is a risk”, but says going into KiwiSaver is a risk worth taking.

It’s a joint effort between you, your employer and the government and you can take you money out for a house or hardship.

Maxwell says the removal of the $1000 KiwiSaver kick-starter shouldn’t deter people from entering the scheme.

She’s disappointed it went, but says that at $2.5 billion, it was costing the government a lot.

She would like to see it offered to certain groups of society, like school leavers starting their first jobs.

“KiwiSaver is a phenomenal thing and I think it’s what’s going to save us in the long term.”

Maxwell concludes: “Spread whatever it is you’ve got; KiwiSaver is a great thing; try to get into the property market too; try to have some savings on the side; the best thing you can do is spread that risk.”

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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How many investment properties do you think she owns? Does she just want millennials to mortgage themselves to insane levels to simply prop up the value of her portfolio?

With an income of $260,000+ per year, Diane Maxwell can probably afford to purchase a rental or two, especially if she paid off her Remuera home she paid a little over $600,000 ten years ago....

I'm taking the position that Diane Maxwell means well by her comments, but the reality is, today if students want to study philosophy, psychoanalysis and propaganda at Uni, the student loan may be such that it would be impossible to get on the property ladder.

I'm not sure I would advise my kids or grand kids to do any tertiary study at all - would they be better off investing the similar money needed for a degree into starting their own business? Or if they want to study, find a job that will help pay their way or provide a scholarship for a degree?

For example, I have lost count in the number of gen y's who have worked into owning their own business, and built up more equity than people similar age and older who have been through Uni.

student loans dont effect the amount you can borrow for a house by much at all.

Only effects servicability of mortgage as it reduces net take home pay by 12.5% (over about 20k).

Deposit still the biggest hurdle for entry, but as people stay in kiwisaver longer they'll find they have 30, 40, 50k sitting there, all of which they can use at 10% deposit so happily buy an above average first home in the regions. As for auckland, no hope, just leave the place

There's a $106k difference (24%) between having a student loan and not having a student loan using Kiwibank's "how much can I borrow" calculator

What income is that based on? I've got a big student loan still and have borrowed more than enough to keep myself happy (although have bought high yielding, top of the line p.n real estate with it so the income from the property itself covers most of the servicability requirements, even at the banks conservative 7% interest rate stress test).

I am sure a lot of Millennials agree with her and would love to be able to do it but feel that it is an impossible (not to mention risky) dream so far out of their reach. To live in Auckland they would need a $100k deposit, right?

More likely need $200K deposit


What she says sounds like sensible advice but it also seems kind of sad and risky. Basically save every penny you possibly can rather than travelling, having fun while you are still young if you want even the slimmest chance of owning your own house and having enough money for later life. Save yes, spend sensibly yes, but don't give up absolutely everything for this silly property market. Economic growth is cyclical. Eventually things will get better for Millennials


The problem is not how much do they (we) need for a deposit. The problem is that the TOTAL price of a house is 9-10 times the median household income!

It's not a matter of being able to save for a deposit. It's a matter of being able to face the repayments during 20-30 years of one's life.

I understand for many the paradigm of "investing in property for the long term" is still valid. But it's an old paradigm unable to be sustained in a global economy where private debt is increasing, salaries decreasing, productive economy returns decreasing and inflation non-existent.


"in a global economy where private debt is increasing, salaries decreasing, productive economy returns decreasing and inflation non-existent.
This is absolutely the issue. When discussing this with people such as my parents (babyboomers) breath is wasted on them. They have enjoyed increasing wage’s and inflation which over time eroded their debt. It would scare me to death if I was a 30 something professional in Auckland starring down the barrel of a 800k mortgagee in today’s wage/inflation.

Are there no other ways you can make it in NZ.?
It would appear property ownership is the only game in town.


This has to be a joke.
Property ladder, purchasing a house as an investment for retirement..
It's like saying "prices will never be cheaper and will continue increasing. Buy now expensive or regret later"

Diane Maxwell, appointed by the Minister of Commerce. I will remember that name when more and more first home buyers find themselves trapped in a mortgage on a depreciating asset.

And when I think that my taxes pay her salary..

Do Millennials buy stereos? How retro.

Vinyl is making a come back so they'll need the old style turn table stereo units we grew up with in the 70's


Diane Maxwell on a Herald's interview on Jan 8 2015

What is your biggest money mistake?

I sold my flat in London before property prices took off. Every now and again it rises in my throat like a kind of financial indigestion and puts me in a really bad mood.

Commerce Minister Craig Foss when appointed Diane Maxwell in 2013

“Ms Maxwell has the skills and experience to work with those most at risk of credit exposure and unnecessarily high levels of debt. Ms Maxwell will build on the Commission’s work to ensure that financial literacy information is accessible to the public generally and to targeted groups."

One day some people unable to repay their mortgage due to lower salaries, higher interests, declining house prices or a combination of all of them will see how the bank (the real home owner) threatens them to take their homes. That day most of them will think: "how could we know? nobody told us this was going to happen". Of course and understandably in a really bad mood not for not making profit but for loosing it all.

Authorities and bank lobbyists will argue: "nobody put a gun on their faces to make them sign a mortgage"

Many will look for answers, and eventually some will find declarations like today's interview with Diane Maxwell. An authority appointed to ensure that financial literacy is accessible and an expert in bad unnecessary debts. Today she recommends millennials to embrace the debt culture , to purchase a house because the house will be worth more when we reach retirement age. I guess prices never go down, right? And I guess 8, 9 or 10 times the annual household income is the new normal.

These are the experts, the government, the ones with the information and must be held responsible for declarations like this. Do not forget.

paying down a mortgage encourages them to put money toward a valuable asset, rather than blowing it on things they don’t need.

Thank you for your advice. Now I know what I do need: debt

It goes to show that free retirement planning advice is worth every penny.

Diversity, rebalancing and having liquid financial assets doesn't seem to be a feature. That said there is a place for this advice, there are a lot of people who have little financial discipline and are heavily focused on consumerism. They would be a little bit better off unless they made a bad choice and ended up buying a rotting heap of a house like you find on the Wellington market.


The last Retirement Commissioner gave speeches that housing affordability was destroying the Kiwi Dream.

She seemed to calling on all of us to fix this socio-political economic problem.

This new Retirement Commissioner seems to think housing affordability is a problem of feckless youngsters not trying hard enough.

I wonder who and why this particular Retirement Commissioner was appointed?

I think the profile from 29 August 2015 is even more damning:

She said: "Oh, God. I've been terrible with money most of my life." She always says this, but it really is true. She does live in Remuera but her house really is a funny little house. She paid a little over $600,000 for it seven years ago and she'd like to knock a wall or two down but she can't afford it. She has an enormous mortgage.

"Do as I say not what as I did" much? Oh and don't get me started on public servants doing interviews at home on a workday over a bottle of wine...

Here's the link:

Friday Sing Along...a Bottle of wine will always help....workaholics...with never ending debt. on a 260k Benefit.

To the tune of That's A-MORE-eh. ...a lot more eh.

When the bill hits your eye like a big pizza pie, /that's - a mortgage

when you bought it to flip it but now youre deep in shit /that's - a mortgage

they told you its fine, prices never decline /with - a mortgage

the deal sounded great, but watch out, oh- too late/ that's - a mortgage

(chorus) the kleptocratic sting, you ding-a-ling-a-lings

entire generations got sucked in /through - a mortgage

prices rising fast but just banks buying with cash /smells - like sew'rage

but the market rebounds so why not double down /on - a new mortgage

then the teaser rate gotcha now you're a defaulter /on - a mortgage

when the next bubble bursts it will surely be worse /that's mortgaaaaage

It seems like a brag as the house has most likely doubled in value given the area. Although it does sound like she lacks the necessary skills for good personal finance. An essential skill for retirement.


The danger of thinking you have to act now for the long term is not knowing how it feels when prices dip knowing you could now buy that same house for 20% less. Been there done that.


haha, buy now at a young age, get yourself mortgaged to the eyeballs and if/when the rails come off housing sleep well knowing you owe the bank more than your house is worth.

My advice, save, travel, work, do it all but keep cash aside and when the music does stop you can be in a situation to buy these things that are going cheap if you really really want to do the property route.

Just because debt is cheap doesn't mean being in debt is cheap.

Great advice. I hope they are listening to you. Being young is about making the most of all those opportunities before being dragged down by debt and worries for the future. I think work, save, travel is a good mantra for your 20s.

Dianne Maxwell is doing her job and doing it well.
Yes it is tough for the young. But the common taters here who abuse her and basically say to the young they should give up are addressing the wrong target.


"Let them buy villas!"

- Marie Antoinette, 2016


"Cobble together a deposit"! God these people are sooo out of touch.

Meaning of - "Who cobbled this thing up? Take it apart and start over. The kids cobbled up their model planes badly. It looks like you cobbled together that report just last night"

Lets cobble up two or three hundred K!!

You could play Out-of-Touch-Boomer bingo on this. Cobble together a deposit! Do this by not buying that Beatles LP and putting the shilling in a jamjar instead!

Former BNZ bank public relations the UK. Lives in Remuera , on her appointment in 2013 the Bankers association welcomed the appointment . 260K plus pa. Best quote 'people may look wealthy but they are really deep in debt.' And her achievement so far in this role.

and ironic (to me) is her BNZ connection - being with them during the time they closed down (froze) one of their registered superannuation/retirement plans and ultimately returned only 99% of the funds invested - but after a wait of more than five years - in a plan advertised as being suitable for those in retirement, or approaching retirement.

I'm sure she had nothing to do with the management of that episode of corporate life - but it is ironic that she is Retirement Commissioner.

And, I am not impressed with her advice to get on the property ladder.


Interesting that she attributes risk to an extra bottle of wine or shoes and not the paradigm with pouring the nation's savings into existing housing supply.

Get a trade or profession where jobs are available at similar wages outside of Auckland, move to smaller centre with affordable housing and better standard of living. Hit the student loan hard in first few years working, then look at what the world has to offer. Still doable if you look past Auckland, Wellington and Christchurch and dont waste money on commuting and high rent.


Now you know where your 260k was wisely invested.

A retarded statement by someone not up with the play, with record debt..

Your very, very own retirement officer, with free, totally free financial advice.

On behalf of all Bankers everywhere.

Borrow up to the hilt to compete with others, borrowed up to the hilt.

If ya cannot beat em, join em.

If it sounds like a spin, it must be a record player. Get with the program. Borrow heaps, buy a heap, whatever cost to yourself, your sanity and better judgement.

Or better yet, become a retirement official, free money for life and a nice pension taxpayer funded....YAY.??!!

DC certainly is over-sensitive about perceived racism - in his eyes

by way of comparison

Here is a smartphone capture of an event last year on a Melbourne bus of a french tourist singing and talking in french which set off an absolute tirade of racist abuse - and she had white skin

and here is the explanation

Listen to Marcus Lush on NewstalkZB and he cuts off any call that has the slightest hint of criticism of Asians flooding Auckland and pushing up house prices, yet the very next segment-presenter accepted and tolerated a British-English woman going right-off the deep end about Maori

It all depends on who you are protecting

Another video

A Spanish woman cops abuse for speaking on her cell-phone in Spanish on a Sydney train

"We Speak English in this country"

What ludicrous advice. On the one hand she's advocating gearing up to the max to buy an overpriced single class asset. On the other she advocates spreading risk:

"Spread whatever it is you’ve got; KiwiSaver is a great thing; try to get into the property market too; try to have some savings on the side; the best thing you can do is spread that risk.”

So, tell me Diane, when you're mortgaged to the hilt on a 700k overpriced shack where do you find the dollars to "spread that risk".

This advice must be music to the Banker's ears!

Just remember "asset prices can go up as well as down and past performance is not an indication of future returns"

Diane is recruiting.

I remember in the 1980's being invited to play the airplane game. You come into the game with $100 and all you have to do is recruit 2 people into the game below you. The trick was that you came in as crew, but needed to make it to Captain to really reap the reward. The plan had 8 engines, so once the crew you have recruited have recruited two crew, and each of those in turn two more, you rise to captain where you are paid the $100 each from the new recruits.

Quite simple and effective really. I declined, but my potential recruiter was a bit of a hussler an did well from the first round. He got invited up to the next level and lost all his profit.


Here's me thinking that the whole purpose of Kiwisaver was to make people not put all their eggs into one basket, to have some rainy day money, to get used to having an investment account - so irrespective of what happened to more risky investments, by the time they got to retirement age they would have a substantial nest egg to cover retirement basics.

When Kiwisaver first started you couldn't use the money for property purchases, and for good logical reasons. Given the state of the housing market as others have mentioned, I thought the sensible advise would be to keep building up your Kiwisaver?

By allowing access to this rainy day money, at least the Govt. are admitting the rain day(s) are here.

Why does New Zealand culture have this ingrained aversion to diversification? There's always this mindset of one asset class and one industry as the be-all and end-all to make us rich forever, and everybody goes running off after it like 6-year-olds in a clump around the ball in a soccer game.

So one day we are being told that migration isn't the reason for property prices going up then the next we are told that the existing population is decreasing with a birth rate of just 1.9. Well if the population is decreasing with no migration then surely we would have a Japan type situation where property prices fell around 2/3rd's from their high.
Most important economies around the world have birth rates below 2.1. Even China's population is expected to start falling in about 12-14 years time so looking at things on a global basis(migration aside) there is going to be a surplus of housing in 15 years time with a much larger demographic age.

To simply look back 15 years and expect the next 15 years to be the same is wrong. The global property market over the last 10 years has been driven primarily by the cost of borrowing dropping dramatically. That is not going to be the case going forward.

I am fairly disappointed in the interview that the Government are not thinking how they can help the younger generation get onto the housing ladder without them having excessive debt.


It is the height of IDIOCY to allow young people's fledgling retirement savings to be used to juice the property market.

It does nothing but rob young people of their retirement savings at the most critical point and hand them on a platter to the older property owning class.

Very few other countries, if any, allow this kind of stupidity. It is prohibited in Australia. It is the reason you cannot transfer a UK pension into KiwiSaver. It is part of the reason house prices are so grotesque in New Zealand. It is not the solution, it is part of the problem.

I seriously question the advice this woman is handing out. She clearly believes the property ponzi can continue growing forever.

The reason why nobody is having kids anymore. You guessed it...

The US does allow 401K loans. The assets are sold for the loan and you have to pay it back with interest. However, the loss of compounding interest is considerable and is a huge set back. Best to put money into retirement and save for a house separately. If you don't have capacity to save for a deposit then just rent you'll be better off financially.

Anyone knows how the B&T auctions went yesterday?

Quantitative easing doesn't stimulate the economy, only house prices. The whole thing is about to pop, so invest in silver and gold, and buy a house when the banks are foreclosing on all of these geniuses. First they came for the farms, and nobody cared, because milk was so expensive. Then they came for the over-leveraged property investors, and boy are we tired of them. Then they came for the over-leveraged first-home buyers, and their well-pensioned free-education mummy and daddy shed a wee tear for them. By that stage, the gold and silver coins were worth a lot more, and so was the bitcoin; whereas houses were a dime a dozen. Did I hear someone say property tax? Wouldn't that make owning lots of homes a huge liability, even if you were a Chinese money-launderer?

Some people think that welfare should be more ways than one.

As per UK, so we follow. At least someone was resigned not to do it.

Some people would steal from the infirm, insane, though it may be you next.

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