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Chapter 1: What is the main topic discussed in this episode?
Retirement is one of those conversations that gives people the ick. First it feels far away, then suddenly it's terrifyingly close, and the whole time you're trying to figure out what to do about it, the ground keeps shifting under your feet. Every election that rolls around, there are new questions. NZ Super might get means tested. The age of retirement might go up.
And if a wealth tax arrives, is there an argument that the savings you've been building could actually count against you? Honestly, how much can you actually count on the pension? Well, welcome to Ask the Experts, where each week people from inside the money world help us make sense of what's happening right now.
In the hot seat, Katie Wesney, National Coaching Lead at EnableMe, who helps clients every day with exactly this. We're going to pick your brains. Making Sense has partnered up with EnableMe to get you the strategies for reaching financial freedom faster. Head to their website to learn more. Visit enable.me today. Okay, back to it.
In the hot seat, Katie Wesney, National Coaching Leader at EnableMe. Congrats on your promotion. Thank you. We love it. So I've got a great letter for you here. Hi, Frances. How real is the risk that future governments means test super or introduce a wealth tax? I'm trying to figure out how much to rely on super in my retirement planning.
But if the rules could change, I'm not sure if it's safe to count on it. And besides, if saving more just makes you a target, what's the actual incentive? A few things wrapped up in this one. So let's start with they want to know how much to rely on super. What do you think? You must talk to people about this all the time.
Yeah, we do.
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Chapter 2: How much can you actually rely on NZ Super?
And I think the younger you are, the harder it is to rely on it as it is at the moment.
Yeah.
And I think you treat it, the older you are, as a foundation, not a plan. Single people living alone get paid $555 after tax per week from super. And if you're a couple, I think it's about $854 a week. At the moment, that often doesn't cover everything as well. So we have to acknowledge that. I think the Massey University study found that a single no-frills metro budget is about $705 per week.
That's already $150 over the pension. And if you want a little bit more wiggle room in terms of the odd holiday holiday, fixing a car that breaks down, maybe helping out family, that rises to about $250 per week. And when you're talking about couples, it's about $1,780 per week. And the pension's 854. That's a huge shortfall. There is already a hole, so I think we need to acknowledge that.
So we come back to what can we control and understanding the numbers and what you need to do going forward in terms of a plan.
Well, exactly. I feel like that's a really tough part of this conversation, right? Where there is a reality of there are big levers that governments can pull and there are big changes that they may or may not make. They talk about them a lot. Some of them happen, some of them don't. And then there is the point of, well, we're the ones who are going to have to live it.
We're the ones who carry the risk of then going through life with or without these things. And... controlling those things for ourself. I mean, how do you balance those things when you are helping clients and talking to them about their money?
Look at both sides of the equation, because I think there is a real need to have that better collective conversation in New Zealand in terms of what's sustainable, because the mass blows your mind in terms of an aging population. And what we're doing now likely is unsustainable as population changes and
And you're never going to have a plan based on government settings staying the same for 30 years. As a collective, we need to be having a big debate, honestly, and asking questions like what happens to the vulnerable people that we might leave behind if we do get this wrong? What kind of society will we want to be? What is fear?
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Chapter 3: What does retirement actually cost week to week?
And you are putting your fate in politicians agreeing the settings in time. Autonomy is important. Control what you do and ensure you have a plan and you are growing your wealth to enable you not having to rely on the government in future. That is the prize.
I could not agree more. I really could not agree more. And I think the way you've framed it there is so important. It's a little bit like when people talk to me about, oh, if I earn more, I'll pay more tax. And I get it. It's often people will look at the payslip and be like, I lost how much to tax? And you can say, oh, you drive on roads. Oh, you get healthcare, yada, yada. Yeah.
When you're looking at the payslip, that's not what we're thinking. It's not how it feels. But At the same time, like say you're paying a 30% tax on something, you've still got the other 60%. You're still ahead of where you were. Are we going to cut off our nose despite our phase? You're still ahead.
You are. You are. And make the most of it because you only control what you control and what you bring in. And it's a classic. I see so many self-employed people come to me and they're like, oh, I'm not cutting back on that tax deductible. Tax deductible does not mean it's free. You are still needlessly spending money. You're just getting that tax benefit back. You've still lost the money.
So again, classic, isn't it? Just in terms of how we justify things in our head. We... all have a collective responsibility to use the resources that we have within us to contribute to us, our families, but also for the greater good. And again, tax can be annoying. I appreciate that, but it facilitates a whole other layer in society. So again, control the controllables.
You can't control the tax settings. You can't control what super looks like. It's almost like plan for it not to be there. And again, anything else is cream. I look at it and I think, you know, yeah, things could change.
Things will change. Yes. Actually, good point. Yeah, they will. But at the same time, it's just like they could change in all sorts of directions. And you might be penalized on this. You might be not penalized on that. At the end of the day, all you can do is protect your fiefdom as best you can and waiting for someone else to do it is to me the riskiest move of them all.
You're essentially banking a loss. You are essentially that and you're putting your fate in someone else's hands. And it does not feel like what anyone should be doing.
Yeah. And I mean, as much as, you know, all the love in the world to politicians and they do a tough job, at the same time, I don't trust any of them. Do you ever watch any of the debates around? I mean, just recently we saw Winston Peters saying he wants to change KiwiSaver. And God forbid that I be agreeing with Winston Peters in a public forum. Who would have thought? Stopped clocks, etc.
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