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My saving and investing
My home
My income
My spending
My cover 
My wellbeing

 


My saving and investing

 

“Money’s only something you need in case you don’t die tomorrow.”

Carl Fox (Martin Sheen) Wall Street

 

Savings in retirement

 

You may think that KiwiSaver has nothing to do with you if you are over 65, but not so fast!

If you joined the scheme while you were working, then there’s no need to abandon it just because the calendar has notched up your 65th birthday. You can leave your money in if you don’t need it immediately and it will carry on working for you.

But don’t ignore it completely. Think about the fund you’re in (usually conservative, balanced, or growth) and talk to your provider or financial adviser about whether you should move it to a fund with a different level of risk and return.

Investors over the age of 65 usually opt for conservative funds, but if you won’t need the money for a number of years, particularly if you are still working, then get some advice about whether that’s the right choice for you.

Another option is to leave it where it is but arrange with your provider to receive a regular payment to top up your NZ Super and other income.

 

 

 

Of course, KiwiSaver isn’t the only place you may have invested your money.

 

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My home  

 

“Debt is normal. Be weird.”

Dave Ramsey

My home in retirement

 

We’ve been borrowing money since the dawn of civilisation – literally. Back in 3500 BC, poor farmers in ancient Mesopotamia would borrow from rich merchants. If they couldn’t pay them back they’d sell their wives or daughters to settle the debt.

That may be tempting if you find yourself with a mortgage after 65, but it’s probably illegal and would certainly put a dampener on family Christmases in the future if you flogged off one of the kids.

Research by Colmar Brunton found almost a third of people won’t have paid off their mortgages by the age of 65. Most said they would either work longer, use their KiwiSaver to pay off the debt, or down-size their house and hope to release equity in their homes to pay off the loan.

 

Here are some other things you can do to help with your mortgage:

 

 

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My income

 

 

“I am indeed rich, since my income is superior to my expenses, and my expense is equal to my wishes.”

 Edward Gibbon

 

Income in retirement

 

So you’ve made it to retirement and, not only that, you’ve paid off your mortgage, saved a nest egg and drawn up a wishlist of things to do, places to visit and people to see now that you’ve got that priceless commodity – time – on your hands.

But pause for a moment before you get started on that wishlist: have you thought about the D-word? Decumulation. After a lifetime of accumulating assets and savings, you need to think about how you are going to decumulate and get an income from those investments that will last as long as you do.

Not everyone has investments to live off, in fact half the people we surveyed aged 60-64 years said NZ Superannuation would be their main source of income in retirement. If you’re unsure how much that is, Work and Income lists the payment rates.

But what other options are there?

 

 

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My spending

 

“All I ask is the chance to prove that money can’t make me happy.”

Spike Milligan

 

 Spending money in retirement

 

Personal debt in New Zealand has reached more than $15.5 billion and that doesn’t include mortgages. If you break that down, it is the equivalent of every man, woman and child owing $3,500 each.

The debts can be personal loans, hire purchase, credit cards or money owed to payday lenders. That’s a lot of money going in interest that you could be putting to other uses. So what can you do to bring your debt down?

 

There’s a lot to consider, so we’ve made it easier for you to work out your options using these guides:

Personal loans

Credit cards

Hire purchase

Consolidating debt

Getting out of debt

Setting goals

Building a budget 

 

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My cover

 

“Fun is like life insurance; the older you get, the more it costs.”

Frank McKinney Hubbard

Insurance cover in retirement

 

Have you heard the one about the motorist who drove home to the wrong address and crashed into a tree that he didn’t have?

Or the snail that ate its way through an elderly man’s carpet?

Fortunately, both people were insured, though they probably didn’t expect they’d be making claims like that when they took out the paperwork.

And that’s the thing about insurance: you never know what might happen to you or your belongings. And when it does, your savings could be eaten up alarmingly quickly if you don’t have any cover.

Making sure your most important assets are covered is a vital part of any financial plan.

Insurance can be split into two areas: general and personal.

 

General insurance:

 

Personal insurance:

 

 

Wills

Insurance isn’t the only paperwork you need to organise. You may be astounded by the number of New Zealanders who do not have a will, let alone one that is up-to-date.

Are you one of the 50 per cent of adults without one? Poor decisions can be made when people are at their most vulnerable after a bereavement. Making sure you have a will helps avoid this and protects your family at a difficult time.

If you die without a will, all your assets do not automatically go to your partner and/or your children. The government has a formula to divide them up.

If you die with more than $15,000 in your KiwiSaver account, the provider will need a letter of administration from the courts before they can release it. This usually costs $2,500 and can take up to eight months to process.

While you’re sorting out your will, ask your lawyer or trustee company to help you arrange enduring powers of attorney, in case you become unable to make decisions for yourself.

 

 

 

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My wellbeing

 

“It is more easy to be wise for others than for ourselves.”

Francois Duc de la Rochefoucauld

Financial wellbeing in retirement

 

Advice

They say advice is like mushrooms: the wrong kind can prove fatal.

While we wouldn’t go that far, it can certainly wreak havoc with your savings and mess up life after work.

The trouble is, most of us are more likely to get advice from our friends, colleagues, even the man we sat next to on the bus, than from a qualified financial adviser. You know, someone who actually knows what they are talking about.

Professional advisers can help you work out what your goals are, what kind of risk you can stomach, and then match your needs with suitable products and services.

They should give you a disclosure statement, which tells you how they get paid, what their level of education is and the services they provide.

The Financial Markets Authority has a list of authorised financial advisers and links to other organisations that can help, but how do you know who to trust?

Here are some questions to ask when looking for an adviser:

  1. Can you give me personal advice that takes into account my situation or just give me general advice?
  2. Can you recommend products from any company or just from a few companies? (If your adviser only offers a limited range ask why and whether they can still offer advice on products you already have.)
  3. Have you helped other people with the same sort of goals? (Some advisers may be experienced in retirement planning, others in property investment or helping young families.)
  4. Do you belong to a professional body like the Institute of Financial Advisers or the Professional Advisers Association? (These have codes of conduct their members are expected to follow.)
  5. How are you paid? (Some advisers charge a fee for their work, others charge a commission or may receive sales-related incentives.)
  6. What sort of research do you use to find the best product for me?
  7. How, and how often, do you update me on my insurance and investments so I know I am still on track?
  8. What are the total costs of your service, initially and ongoing, and what happens if I stop using you – is there a penalty?

 

Here are some more helpful tips:

 

There’s more information here:

Getting advice

 

Scams

Scams can come in all sorts of ways - in an email, on the telephone, in the post, even someone knocking on your door - but they all have one thing in common: they are trying to con you out of your money.

Scammers are forever coming up with new ways to defraud you and they’re pretty clued up on technology.

Some try to befriend you first, becoming part of a group that you belong to such as a church group or community organisation.

So it pays to bear a few things in mind:

 Pre-warned is pre-armed – know the “red flags” and common scams by checking consumerprotection.govt.nz. And if you think you’ve been scammed, report it to Scamwatch. You might help others avoid being caught out.

Remember that anyone, of any age and ethnicity, can be a victim of a scam, so keep an eye out for your family and friends.

How to avoid being scammed:

 

Fun

A hoverboard and a home brew beer kit probably aren’t the first things that spring to mind when you think about must-haves in retirement.

But we all have hobbies and passions that we don’t want to give up just because we’re getting a little older.

24% of New Zealanders work full or part-time over the age of 65. Some do so out of necessity, others out of choice because they enjoy the fulfilment and social contact that their job brings.

This may be something you want to consider, including the type of work you’d like to do and whether any re-training is required.

Others like to do voluntary work, giving something back to the community they live in.

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Photos: Gratisography & Unsplash