Best Retirement Savings methods to protect from Asset means testing ??

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Forums › Finance and wealth management › Best Retirement Savings methods to protect from Asset means testing ??

snowkiwi

151 posts

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#290234 29-Oct-2021 09:52

Im a safe investment type of guy - high risk or stocks freak me out - so I’ll never be rich which I’m fine with.
I’ve been responsible and have retirement money diligently saved which always sat in term deposits - which have rubbish returns at the moment I know.

As I understand it any bank held money can be asset means tested if I ever did need a benefit like retirement or the dole/sickness.

Where do people recommend protecting their retirement money where the powers that be can’t make you spend it if you lose your job/income stream.

My immediate (likely naive ) thoughts are lump sum into KiwiSaver, or Precious metals; are these viable protected options?

any thoughts would be most appreciated

cheers

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#2803325 29-Oct-2021 10:05

At this time NZ Super is not asset or income tested (tax liabilities are another issue) unless you apply for asset and income tested additional support such as Disability Allowance, Rest Home support etc. You would be ill advised to attempt to hide assets or income as the penalties will hurt more.

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jonathan18

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#2803329 29-Oct-2021 10:09

There's always just the alternative of just following the spirit if not letter of the law and being upfront about your ability to support yourself if those situations like unemployment come up.

I've just been through this with my elderly mother, who is far from wealthy but didn't qualify for RCS due to the money from the sale of her house.

It's life. Deal with it or move somewhere with more 'favourable' settings so you can hold onto your precious money.

ANglEAUT

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#2803331 29-Oct-2021 10:11

snowkiwi: ... so I’ll never be rich which I’m fine with...

Very finite thinking. There are other options to accumulate wealth besides stocks & other high risk investments. 😉

My SO is also very risk averse, so I too am looking for the same answers as you. Whatever the answer is, I know that consistency is part of the solution.

Please keep this GZ community vibrant by contributing in a constructive & respectful manner.

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eracode

Smpl Mnmlst
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#2803337 29-Oct-2021 10:23

Any means test will be by way of a declaration you make in writing - and will cover all your assets. When you sign it you are declaring that it's the truth and whole truth. If it's not the truth and you get found out, you'll be in deep do-do. There's no way to get around this.

Anyway, as mentioned above by @Jonathan18 , if you have sufficient assets to not really need (or qualify for) a benefit or dole etc, why should you try to pull a fast one to hide assets so that you can get the benefit or dole?

I'm not sure this forum is the right place to ask a question that might be considered to be unethical.

Sometimes I just sit and think. Other times I just sit.

afe66

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#2803420 29-Oct-2021 11:29

Planning now cant account for laws later.

Just like I'm pretty sure the pension age won't be 68 in 20 yrs. I expect to work til at least 70..

A more punative sceptical interpretation of why trusts were setup could cause issues.

snowkiwi

151 posts

Master Geek

#2803564 29-Oct-2021 13:33

Thanks for the replies guys.
Nah I’m too much of a goody good to try to defraud the system. And my wife, the supreme goody good is my backup moral voice! No I’m just looking at what a lot of more money savvy people already do, legally invest in assets (Gold, property, Art, etc), instead of just a bit of cash in the bank.
I’ve never used any of the social welfare system / Covid subsidy etc but am coming up on retirement in several years and COVID based loss of income made me think of potential loss of job.
I’m glad superannuation isn’t asset tested , income tested I’m fine with and expect it. That was my main worry. As we had put on hold any holidays (just camping) for the past decades to add to our retirement fund in the bank because all the experts say you need x amount for retirement.

cheers

eracode

Smpl Mnmlst
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#2803616 29-Oct-2021 13:48

Good man - sorry if I was an Asset Grinch.

Sometimes I just sit and think. Other times I just sit.

timmmay

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#2803617 29-Oct-2021 13:54

Term deposits barely match inflation, sometimes you're losing money in them, while the bank make a good profit. A good diversified managed fund gives you much better returns within the risk profile you choose. If you have some time to retirement then high risk can be worthwhile as the long term gains tend to be better, even though they go up and down a lot more. I've done ok in growth funds, moving the money to conservative funds before big downturns, putting it back into growth when it was on the way back up.

Choose a good fund manager, or split across a small number of managers. We have Kiwisaver with one fund, other retirement savings with a second fund, to reduce our risk. Fisher Funds is one of the largest fund managers in NZ, I've used them for 20 years or so. Simplicity is interesting in that Public Trust holds the assets and simplicity direct the investments.

I can't help with asset protection. My uninformed and possibly incorrect view is the government is systematically breaking down things like family trusts to make it more difficult to hide assets.

jonathan18

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#2803619 29-Oct-2021 13:56

snowkiwi:I’m glad superannuation isn’t asset tested , income tested I’m fine with and expect it.

Well, I’ve got some good news for you! NZ Superannuation is (currently) neither income or asset tested. Weird, if you ask me, but dat’s da law…

https://communitylaw.org.nz/community-law-manual/not-rated/types-of-benefits/youre-65-or-older/

No income-testing or asset-testing

NZ Super is neither income-tested nor asset-tested.

An exception is that if your partner is under 65 and you choose to include them in your NZ Super, then both your income and your partner’s income will be taken into account.

https://communitylaw.org.nz/community-law-manual/not-rated/types-of-benefits/youre-65-or-older/

shk292

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#2803621 29-Oct-2021 13:58

I support what Timmay says above - find a trusted adviser and get him to explain all about investment options and risk levels. There is a world of choices available between the two kiwi favourites of houses or term deposits.

jonathan18

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#2803625 29-Oct-2021 14:05

timmmay: Simplicity is interesting in that Public Trust holds the assets and simplicity direct the investments.</p>

I thought this was the standard arrangement for investment funds? And I’m sure it’s an absolute requirement for all KiwiSaver schemes (ie, all assets are held in a trust, not by the fund manager themselves).

As an example, Milford’s investor guide says “All investments in the Funds are held on trust by the Supervisor or its Custodian in accordance with the terms of the Trust Deed and the relevant regulatory or legislative obligations for the benefit of investors.”

MikeB4

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#2803628 29-Oct-2021 14:07

jonathan18:

No income-testing or asset-testing

NZ Super is neither income-tested nor asset-tested.

An exception is that if your partner is under 65 and you choose to include them in your NZ Super, then both your income and your partner’s income will be taken into account.

https://communitylaw.org.nz/community-law-manual/not-rated/types-of-benefits/youre-65-or-older/

Including an underage spouse provisions have been removed. They need to qualify for Income Support on their own account eg Job Seekers

rugrat

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#2803763 29-Oct-2021 16:09

The dole is not asset tested. I heard stories of people going to WINZ and being lied to about how much money they’re allowed in bank before they pay job supporter benefit.

https://communitylaw.org.nz/community-law-manual/not-rated/types-of-benefits/overview-of-the-different-benefits/

“The working-age main benefits aren’t asset-tested – that is, you won’t be refused a benefit or have your benefit reduced because of how much savings or other property you have.”

Also I’m not sure how they treat fund growth’s like Kiwi Saver where you can’t access that money until retirement under most circumstances.

Lastman

297 posts

Ultimate Geek

#2804484 30-Oct-2021 18:45

Declare yourself a church(charity) and you can keep all your money.

Aaroona

3066 posts

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#2804505 30-Oct-2021 21:18

timmmay:

I've done ok in growth funds, moving the money to conservative funds before big downturns, putting it back into growth when it was on the way back up.

As the saying goes- generally speaking; time in the market beats timing the market.

A lot of people got burned, especially during early COVID days when the growth funds and stocks were tanking hard. I personally know a few people that moved to conservative too late, and then didn't move to growth quick enough. Had they just stayed in the funds they were in, they would have been perfectly fine and actually considerably better off.

Unless you really know what you're doing, I would be very surprised if you found anyone who suggested it a good idea beyond just luck.

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