So how is everyone saving money for old age?

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Forums › Finance and wealth management › So how is everyone saving money for old age?

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Ultimate Geek
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#2007085 3-May-2018 13:18

Kiwisaver at 3% for both of us and $150 per week into a managed fund, as a long term strategy. Also paying down the mortgage with higher than minimum payments, and any extra money like pay increases, reduction in daycare costs as the kids get older etc will move into the managed fund.

It's not really enough but once we pay the mortgage off, in about 15 years, everything will move into long term savings/investment.

esawers

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Ultimate Geek
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#2007086 3-May-2018 13:21

My work super is 5.5% + 11%

We are mortgage free and have a few investment properties, so most of the spare $$ goes into paying off the rental mortgages so eventually we will have income coming in.

MikeAqua

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#2007091 3-May-2018 13:31

I invest in KS to the level my employer is prepared to contribute (legal minimum).

Additional amounts each fortnight money I put into a different investment instrument. There is no benefit to KS above what my employer matches. Have a few other little investments (punts really) in start ups.

We've had a rental (used to be my home) for about 10 years. We recently bought an apartment which is tenanted, although it will become a second home as soon as I can legally turf the tenants out.

Mike

kryptonjohn

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#2007095 3-May-2018 13:39

There are some interesting legal wrinkles around kiwisaver fund savings. They cannot be seized by the courts as proceeds of crime. They are however, matrimonial property and subject to being split on divorce regardless of who contributed to them.

scuwp

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#2007096 3-May-2018 13:41

Lotto

Lazy is such an ugly word, I prefer to call it selective participation

xontech

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Ultimate Geek
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#2007099 3-May-2018 13:43

kryptonjohn:

Own my own business so KiwiSaver has no freebie benefit to me.

I'm hoping you know that if you personally put in $1,042.86 a year the Government contributes $521.43 a year. I'd call that a freebie benefit.

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kryptonjohn

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#2007114 3-May-2018 13:50

xontech:

kryptonjohn:

Own my own business so KiwiSaver has no freebie benefit to me.

I'm hoping you know that if you personally put in $1,042.86 a year the Government contributes $521.43 a year. I'd call that a freebie benefit.

Fair point. What I should have said is I would have to pay the employer contribution as well as the employee.

Also, just re-appraising myself with the rules... I believe I would have to contribute 3% myself plus 3% from the business i.e. 6% from myself to qualify for that $521 which makes it less attractive compared to laying that pre-tax 6% off against debt.

mattwnz

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#2007116 3-May-2018 13:51

Batman:

MikeB4:

Batman: At the rate things are inflating, saving is the worst thing you can do over the projected long term. Investing something is better. Kiwisaver is investing as long as you're not on the bottom two risk profile.

Our current rate of inflation is 1.1%, saving should still be part of the overall planning.

don't know. I was saving up for a house, it was 500k in 2015. that house was sold that resold in 2017 for 850k. how many % is that?

Although it may still be 850k in 5 years time. It is more of a gamble, as property prices are largely tied to what people can afford to spend and the mortgage they can afford to service. Many people will be stretched if the interest rates go up to say 8%. The thing is that wages haven't increase at the same level. You can also only have a maximum of 2 people in a couple working, so the incoming money to service the mortgage is limited. So you only need interest rates to start creeping up and the weekly servicing amount rises,

I think real world inflation, if you take into consideration housing and building materials etc, is significantly higher. But they seem to omit these sorts of things. Consumables such as TVs which have dropped in price, seem to help the inflation numbers.

xontech

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Ultimate Geek
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#2007118 3-May-2018 13:52

kryptonjohn:

xontech:

kryptonjohn:

Own my own business so KiwiSaver has no freebie benefit to me.

I'm hoping you know that if you personally put in $1,042.86 a year the Government contributes $521.43 a year. I'd call that a freebie benefit.

Fair point. What I should have said is I would have to pay the employer contribution as well as the employee.

Also, just re-appraising myself with the rules... I believe I would have to contribute 3% myself plus 3% from the business i.e. 6% from myself to qualify for that $521 which makes it less attractive compared to laying that pre-tax 6% off against debt.

Good idea to re-look at it. You don't need to do the employer contribution, only if you pay it out of the business. If you just pay your personal contribution out of your own money you don't need to get the business involved at all, and so you only need to pay the $1042.86 a year. I own my own business and do exactly this.

kryptonjohn

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#2007120 3-May-2018 13:55

Ok thanks for that!

mattwnz

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#2007121 3-May-2018 13:57

kryptonjohn:

xontech:

kryptonjohn:

Own my own business so KiwiSaver has no freebie benefit to me.

I'm hoping you know that if you personally put in $1,042.86 a year the Government contributes $521.43 a year. I'd call that a freebie benefit.

Fair point. What I should have said is I would have to pay the employer contribution as well as the employee.

Also, just re-appraising myself with the rules... I believe I would have to contribute 3% myself plus 3% from the business i.e. 6% from myself to qualify for that $521 which makes it less attractive compared to laying that pre-tax 6% off against debt.

No you don't, although you should check with your accountant to be sure for your situation. I am self employed, and I only put in $1050 a year to get my free $521. Although I am just in a cash fund so the interest rate is probably worse than inflation, and there is a annual fee they charge, but I was going to withdraw it eventually for a first home.

If you start working for a company, you can also go on a contributions holiday.Although I do wonder if labour will change that, as every government seems to make chages to kiwisaver that makes it less and less attractive. Eventually I think it will be compulsory and will lose the tax credits.

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acetone

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Master Geek
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#2007125 3-May-2018 14:01

I have also been doing this. I have been making a one off personal payment for just over the 1042 amount each year and receiving the $500 odd from the government.

xontech:

kryptonjohn:

xontech:

kryptonjohn:

Own my own business so KiwiSaver has no freebie benefit to me.

I'm hoping you know that if you personally put in $1,042.86 a year the Government contributes $521.43 a year. I'd call that a freebie benefit.

Fair point. What I should have said is I would have to pay the employer contribution as well as the employee.

Also, just re-appraising myself with the rules... I believe I would have to contribute 3% myself plus 3% from the business i.e. 6% from myself to qualify for that $521 which makes it less attractive compared to laying that pre-tax 6% off against debt.

Good idea to re-look at it. You don't need to do the employer contribution, only if you pay it out of the business. If you just pay your personal contribution out of your own money you don't need to get the business involved at all, and so you only need to pay the $1042.86 a year. I own my own business and do exactly this.

Fred99

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#2007128 3-May-2018 14:10

Batman:

MikeB4:

Batman: At the rate things are inflating, saving is the worst thing you can do over the projected long term. Investing something is better. Kiwisaver is investing as long as you're not on the bottom two risk profile.

Our current rate of inflation is 1.1%, saving should still be part of the overall planning.

don't know. I was saving up for a house, it was 500k in 2015. that house was sold that resold in 2017 for 850k. how many % is that?

How many %? That means , as sure as bitcoin, that if you bought it for $850,000 as your own home, borrowing at an interest rate of 6% over a 20 year term, once you'd paid it off then the house would be worth $161.4 million, but you'd have only had to pay back $2.7 million, giving you a $158.7 million tax-free profit - if you can find a buyer of course.

Item

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#2007137 3-May-2018 14:18

acetone:

I must be missing something but I don't quite understand what your +3% is.

Are you saying that you get 8% taken out of your pay as your contribution and then your employer puts in 4% and then you manually transfer another 3% of your pay in each cycle?

yeah, I didn't word that very well did I!

We both put in an elective 8% and our respective employers contribute 3% and 4%. Mine give me an extra 1% over their obligation. Not adding any extra at this point, but with 8.5% growth in the last 12 months for mine, I will probably start doing so.

Batman

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#2007154 3-May-2018 14:26

Fred99:

Batman:

MikeB4:

Batman: At the rate things are inflating, saving is the worst thing you can do over the projected long term. Investing something is better. Kiwisaver is investing as long as you're not on the bottom two risk profile.

Our current rate of inflation is 1.1%, saving should still be part of the overall planning.

don't know. I was saving up for a house, it was 500k in 2015. that house was sold that resold in 2017 for 850k. how many % is that?

How many %? That means , as sure as bitcoin, that if you bought it for $850,000 as your own home, borrowing at an interest rate of 6% over a 20 year term, once you'd paid it off then the house would be worth $161.4 million, but you'd have only had to pay back $2.7 million, giving you a $158.7 million tax-free profit - if you can find a buyer of course.

Sorry I had the impression it is mainly the cost of building that seems to be driving prices up. I mean, 2.5k/m2 for the most basic of houses! SOrry I don't know how that has changed between 2010 and 2018. I thought you could build a basic house for 1.5k/m2 in 2010. A 70% increase.

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