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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1717 posts

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#2007709 4-May-2018 10:55

floydbloke:

Trees, I own a few hundred (might even be a few thousand) through a forestry management company. This makes me feel quite good as it's a 'green' investment, and at the moment it looks set to return about 9% p/a net (compounded). Although it is a commodity and will depend on the log prices at harvest time about 7 years from now. The most frustrating thing about this is, despite owning lots of pine, I still need to part with $20 or so when I go to Mitre 10 for a 2 metre length of 4x4.

Any advice on this? I have been thinking about a forestry investment - either shares or a whole small plot.

kotuku4

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#2007710 4-May-2018 10:59

Yuup Boy put yer cash unda mattress or burry n yard. So greedy gobermet and banks cannt got it!

Modest house paid off, with solar PV, extra insulation and double glazed.

KiwiSaver (Simplicity growth fund) 8% contribuion, plus employer 3%.

Some in Squirrel money. When I have enough saved I will put some in cash funds eg Simplicity investments funds, minimum $10,000 investments, same funds and fees as Kiwi Saver, but money can be topped up, or withdrawn in a few days if needed.

kryptonjohn

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#2007711 4-May-2018 11:03

Item:

floydbloke:

Trees, I own a few hundred (might even be a few thousand) through a forestry management company. This makes me feel quite good as it's a 'green' investment, and at the moment it looks set to return about 9% p/a net (compounded). Although it is a commodity and will depend on the log prices at harvest time about 7 years from now. The most frustrating thing about this is, despite owning lots of pine, I still need to part with $20 or so when I go to Mitre 10 for a 2 metre length of 4x4.

Any advice on this? I have been thinking about a forestry investment - either shares or a whole small plot.

If you get in at planting they are long term - 25 years or so depending on location. You put in a bit at the start to buy the land and plant the trees, then for about a decade there's an annual contribution for maintenance, pruning, insurance etc then the cashflow in pretty much drops to zero in my case as the carbon credits apparently covered the annuals.

Outfits like these allow you to get a share:

www.forestenterprises.co.nz

www.rogerdickie.co.nz

https://www.greenplan.co.nz/

I have used the first one in the 90's and am waiting now for about 2022/2023 to harvest. It's been relatively painless.

Needless to say you should do a good bit of reading and perhaps get an expert opinion before diving in.

kryptonjohn

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#2007712 4-May-2018 11:11

kotuku4:

Yuup put it under mattress or bury in back yard. So greedy gobermet and banks cannt got it.

Columbian drug lord Pablo Escobar couldn't find enough places to hide his mountains of cash so buried tons if it. Water got in and rotted it to mush so be careful!

Item

1717 posts

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#2007725 4-May-2018 11:30

kryptonjohn:

If you get in at planting they are long term - 25 years or so depending on location. You put in a bit at the start to buy the land and plant the trees, then for about a decade there's an annual contribution for maintenance, pruning, insurance etc then the cashflow in pretty much drops to zero in my case as the carbon credits apparently covered the annuals.

Outfits like these allow you to get a share:

www.forestenterprises.co.nz

www.rogerdickie.co.nz

https://www.greenplan.co.nz/

I have used the first one in the 90's and am waiting now for about 2022/2023 to harvest. It's been relatively painless.

Needless to say you should do a good bit of reading and perhaps get an expert opinion before diving in.

Thanks - will check the links. 25 years is about right as I am 40 now, so be good to get in from the planting stage!

antoniosk

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#2007738 4-May-2018 11:38

Both the employers contribution and the employee contribute are being taxed at the same rate (governed by how much you earn). If you earn 1000 for the pay period you are still paying tax on that 1000 even though 8% is going to kiwisaver. It isn't 1000 - 8% and then only paying tax on 920.

Sorry, I didn't mean to mislead. You're correct, the 8% is calculated from your gross income, and deducted from your net income. If your marginal rate works out at 33%, you'll pay that in PAYE, then the calculated number for the 8% will be taken from whatever is left. Other countries like the UK deduct pension contributions from the tax you've paid.

If the employers contribution is 3%, the 3% is calculated on the gross income, and then a deduction is taken from the 3% at your marginal rate. The employer doesn't pay the tax in addition to the contribution, the tax comes FROM the contribution.

________

Antoniosk

ben28

190 posts

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#2007758 4-May-2018 12:08

Item:

floydbloke:

Trees, I own a few hundred (might even be a few thousand) through a forestry management company. This makes me feel quite good as it's a 'green' investment, and at the moment it looks set to return about 9% p/a net (compounded). Although it is a commodity and will depend on the log prices at harvest time about 7 years from now. The most frustrating thing about this is, despite owning lots of pine, I still need to part with $20 or so when I go to Mitre 10 for a 2 metre length of 4x4.

Any advice on this? I have been thinking about a forestry investment - either shares or a whole small plot.

be careful, its a long term investment and who knows what the state of the market will be when you come to harvest.

I lost 5k in a forest investment back in the 90's. Price of logs was low, location of forest was costly to get logs to port etc etc.

Ask , if its such a good investment why are people asking for your money, surely if its so good they would do all they could to get their mates in ....

Treat it as a speculative investment, and only allocate a small proportion of your savings (like 5%)

My conclusion after a lot of research for long term , is drip feed money to a low cost, diversified , international share fund. Stay in no matter what the market does. As you get closer to retirement move some to a more conservative investment. But remember when you retire you should live for another 20 years, so leave some in more aggressive investments.

There is some thought that a 70% share/30% bond delivers the best return based on risk, but I wouldn't buy bonds now with the interest rates so low. ( as when rates rise the bonds value will drop)

And a couple of other tips

- maximise your income (get a better job, more education, volunteer for projects where you can build your skill base)

- minimise your expenditure (do you really need that new Iphone, Tv , car , meal out , take away coffee, $300 pair of shoes....)

Lenovo

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kryptonjohn

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#2007767 4-May-2018 12:20

Wise words Ben. Mines on track to make a decent return but eggs, baskets and all that.

JimmyH

2886 posts

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#2007889 4-May-2018 15:27

mattwnz:

Super is going to be around for a long time now that they aren't raising the entitlement age.

I wouldn't count on it.

With the generosity of the scheme (it is fairly generous), the increased health costs that the government also bears for older people, and the increasing proportion of the population that has to qualify I suspect something will have to give eventually. I doubt they will scrap the pension, so the most likely changes are an increased age of entitlement or means testing. And an increased age is likely to be the least controversial and the administratively simplest option.

So I fully expect I will be over 65, and possibly 68 or even 70, before I qualify.

My plan: pay down the mortgage as fast as possible, remain in a fairly good (non Kiwisaver) scheme I have belonged to for ages, add a rental property to my assets shortly, and continue to divert the mortgage payments into building up savings once the mortgage is gone. Barring employment/health calamities in the next 10-12 years, that strategy plus National Super by around age 68, should leave me relatively comfortable.

Jase2985

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#2007893 4-May-2018 15:29

JimmyH:

mattwnz:

Super is going to be around for a long time now that they aren't raising the entitlement age.

I wouldn't count on it.

With the generosity of the scheme (it is fairly generous), the increased health costs that the government also bears for older people, and the increasing proportion of the population that has to qualify I suspect something will have to give eventually. I doubt they will scrap the pension, so the most likely changes are an increased age of entitlement or means testing. And an increased age is likely to be the least controversial and the administratively simplest option.

So I fully expect I will be over 65, and possibly 68 or even 70, before I qualify.

My plan: pay down the mortgage as fast as possible, remain in a fairly good (non Kiwisaver) scheme I have belonged to for ages, add a rental property to my assets shortly, and continue to divert the mortgage payments into building up savings once the mortgage is gone. Barring employment/health calamities in the next 10-12 years, that strategy plus National Super by around age 68, should leave me relatively comfortable.

or it be means tested

Fred99

13684 posts

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#2007933 4-May-2018 15:41

JimmyH:

mattwnz:

Super is going to be around for a long time now that they aren't raising the entitlement age.

I wouldn't count on it.

With the generosity of the scheme (it is fairly generous), the increased health costs that the government also bears for older people, and the increasing proportion of the population that has to qualify I suspect something will have to give eventually. I doubt they will scrap the pension, so the most likely changes are an increased age of entitlement or means testing. And an increased age is likely to be the least controversial and the administratively simplest option.

So I fully expect I will be over 65, and possibly 68 or even 70, before I qualify.

My plan: pay down the mortgage as fast as possible, remain in a fairly good (non Kiwisaver) scheme I have belonged to for ages, add a rental property to my assets shortly, and continue to divert the mortgage payments into building up savings once the mortgage is gone. Barring employment/health calamities in the next 10-12 years, that strategy plus National Super by around age 68, should leave me relatively comfortable.

I don't know how old you are, but as you get older, the reality of this will inevitably sink in through either your own experience or from the experience of others around you - and that is that increasing the pension age will be incredibly cruel and unfair to some people, and this despite that may have been the best intentions and efforts of those people when they were younger.

It's not my problem - and I expect that it'll be ignored anyway, but I'd recommend that young people resist any suggestion that the pension age be increased, as you don't know what's around the corner. Most of all don't support increases to the age of entitlement based on it costing too much, or out of spite sometimes, but with a little luck , and in what seems to be the blink of an eye, one morning you'll wake up and realise you're old too.

Fred99

13684 posts

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#2007934 4-May-2018 15:44

Jase2985:

or it be means tested

No doubt providing incentive for even more wealthy people to structure their affairs to minimise wealth, and more ordinary people will not save for retirement through Kiwisaver etc, lest they lose entitlement to the pension.

It should be left alone and as it is.

invisibleman18

1360 posts

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#2007941 4-May-2018 15:59

Just Kiwisaver really. With the high cost of rent and a partner with next to no income due to medical conditions it's extremely difficult to save anything from take home pay at the moment and given house prices I don't expect home ownership to ever be a reality for us, barring some unexpected windfall. I'm 31 so haven't given much thought to retirement as I guess I still think of it being so far away that it's not today's problem. But when I do think about it I find it quite depressing to imagine being say 70 and still working and still having to deal with landlords and inspections and queuing up for rental viewings each time the place we're in gets sold, which I expect will be the realty without our own house to cash up.

On the other hand my, my parents have retired (my Dad to stop work sure to health issues at 58) but their life is little more than sitting at home waiting for the next hospital appointment. So I guess the best you can hope for is to be healthy enough to be able to enjoy a few years without working.

frankv

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#2007952 4-May-2018 16:07

JimmyH:

With the generosity of the scheme (it is fairly generous), the increased health costs that the government also bears for older people, and the increasing proportion of the population that has to qualify I suspect something will have to give eventually. I doubt they will scrap the pension, so the most likely changes are an increased age of entitlement or means testing. And an increased age is likely to be the least controversial and the administratively simplest option.

I don't think that "increased health costs" is actually true.

Typically, there are large health expenditures in the last 6 months of a person's life, irrespective of how old they are. Prior to the last 6 months, health expenditures are pretty static. So an aging population doesn't necessarily mean a huge increase in health costs. It just means that a few years of high spending have been deferred for those few years.

The increasing proportion of the population that qualify for Super is a good thing. As there's more productivity from machines and efficiency, people should get some benefit in terms of extra years to do what they want. We aren't here to be wage slaves to produce profits for every year that we're capable.

frankv

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#2007954 4-May-2018 16:10

Fred99:

Jase2985:

or it be means tested

No doubt providing incentive for even more wealthy people to structure their affairs to minimise visible wealth, and more ordinary people will not save for retirement through Kiwisaver etc, lest they lose entitlement to the pension.

I fixed that for you.

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