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Chapter 1: What happens if NZ Super gets cancelled?
Hello and welcome along to another webinar. It is so good that you are here with us this evening because we are going to be talking about what happens if NZ Super gets cancelled and what that actually means for you and your retirement plan. Now we've got over 1200 people registered for this evening. So you guys are all coming in right now.
I see we've got a couple of hundred here already, which is wonderful. Now, we are going to jump straight into, oh no, first, before we jump straight into it, we need to do our audio check. And my favourite question to ask is, what colour T-shirt do I have on today? What colour T-shirt do I have on? Let me know down in the chat, just so that I can make sure that you guys can hear us.
Someone's saying that we've got red wine. I'm seeing a lot of white. That means you guys can hear us. By the way, as we go throughout this evening, there are going to be people who say, I can't hear the audio.
And so what I'm going to need you guys to do is help me out and either let producer Dave know in the comments if the audio genuinely has dropped out or if it's usually what happens and the audio is fine and it's just one person having trouble with their computer, I'll ask you to help me out and let them know as well. But we are here today doing another one of our property live sessions.
And today is all about what happens if NZ Super gets cancelled. And this is really important because the Treasury recently put out a report that said for New Zealand Super to stay the same share of our economy, to stay the same share of GDP, one of three things needs to happen.
Either the age of eligibility for NZ Super needs to go to 72 or 73, or the average income tax needs to go up from 21% to 32%. Andrew's got high blood pressure as it is, he's about to have another heart attack. Or GST needs to double from 15% to 32%.
So we as a country have got some really tough choices, which is why our politicians are talking about it and also why you guys have signed up tonight and said, hey, I want to see what my retirement plan looks like if NZ Super changes.
And I think it's really interesting that Milford's CEO, one of the largest fund managers in New Zealand, came out and said that the truth is that we as a nation, as New Zealand, cannot afford the superannuation system that we currently have. And Andrew, I know you've got a pretty scary stat that you're going to share for us.
I just think you're a good looking CEO. So if we go back to the 1960s, For every person who is receiving the superannuation, there were seven workers that were contributing through their taxes towards that retiree's pension.
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Chapter 2: What are the implications of changing NZ Super eligibility age?
72 plus think that's where we're going to go. And I think that's quite useful for Andrew and I to know so that when we go through and look at what a retirement plan looks like, we can keep some of those numbers in mind for you guys. But we will definitely show you some examples of when the superannuation kicks in at 65 and also a little bit later on.
With that, I do want to mention that none of the numbers we're sharing today are there to scare you. I know that one thing people sometimes say about financial advisors and financial advice businesses is that sometimes our type of companies might say, hey, look, the NZ Super's not going to be there.
And people say that's to scare you into investing more because we're trying to create lots of fear. And what I often say is, There is an incentive to make the world seem really bleak and say, hey, the only answer is to invest, and the only answer is to invest through our specific company. But the way I also think about it is... What's going on here?
Well, the way I think about it is there is an incentive for hairdressers to tell you that you need a haircut.
You do.
But sometimes the hairdressers are right and you really do need a haircut. And I think that's true about like financial advisors have an incentive to tell you to invest, but sometimes you also do need to invest. But I like to put out that kind of highlight that bias early on so that you guys can get your little BS detectors out. And if we're trying to make things really sound really scary and
force you to invest through us. It's all out in the open. We're saying, here's the bias. Watch out for it. Call us out if you think we're being too aggressive on the investing side. But with that, if you haven't heard about us tonight, and there are quite a few of you guys here, you might be thinking, who are you guys?
And so just to give you a bit of background between Ed and myself and the company, in terms of the things that we do, so we've got New Zealand's number one business podcast, about 12 million downloads now. So we're going for a six, Seven years we're coming up. Seven years. And every single day we release another episode.
Over and above that, we've released two and a half thousand podcasts, over 50 webinars, all on our website. We've got 17 financial advisors across our team and we've written a book, Wealth Plan, which is currently in bookstores. Ed, he's our economist here. He's a property investor himself and he's a regular contributor to Newstalk ZB.
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Chapter 3: How do we figure out what our retirement looks like?
We need to then think about age gaps, Andrew. And so let's pull up another scenario. For this scenario, let's keep most of the...
The detail's the same. I've actually updated, so we've got all the details the same here. So I've just gone through and whipped and done all that. We've got a different age gap now. So Angela's now younger. Ed's now older. So I'm 50 and she's 40. More reflective of his attitude. And now we're going to say Ed's going to retire at 65. She's going to retire at 55.
So they're going to retire at the same time. But different ages.
Chapter 4: What is the biggest lie people tell about retirement?
And Angela's going to live till 93. That's a long time in retirement. That's almost 40 years for her in retirement.
That's the big thing. So not only is it sooner that you have to have your money, but you're going to have a lot more because of the duration. And then we're going to do that same step down. But now we've got 20 years in those go-go years. Yeah. Now, Ed's going to be less interested in doing some things as time goes on, but we do need to account for the fact that Angela's fit and healthy.
And then again, I've kept those same inflation numbers. I've kept the same Kiwi Savers in there. I've still got their rental property in there with 50% ownership, the Hamner Springs property that they bought with their friends. The nickels. Now, if we go into those spending years again, so this should look exactly the same as it did before. Here we've got a real problem now.
Do you want to talk through that? So here it looks like if we tried to do this and didn't save any more, we're about, just zoom out slightly, Andrew, so everybody can see it, but we're about $1.3 million short. And now zoom in to like you had it, because now I realise what you wanted me to talk about.
The other thing that's interesting here is you see how that dark green goes negative while we've still got that dark blue there. So that dark blue is Angela's KiwiSaver, but we're going to go broke before we can even access that KiwiSaver, right? Because we can't get that out till she's 65.
So what this tells us is if we keep spending the way that we want to, we're going to go broke really, really early by the time she's 59, by the time I'm 69. Do you know the hard part here?
Now you've got to ask yourself, well, what am I going to do? This is that sacrifice question. Do we want to sacrifice our time together? Do we want to sacrifice the things we do together? Or do we want to sacrifice a bit more money today? Okay, so what are our options? What can we do? Now, this is where the bias alert comes on. I'm into property. That is kind of my thing.
So I'm going to show an additional property here. Let's say we just close this now with some property. Let's say they don't do anything more with their friends, the Nichols, because they're sick of dealing with them. Let's say they buy a property in Auckland today. They probably buy a property in Christchurch in a few years' time. So let's say Auckland gets 6% growth. Christchurch might get 5%.
We'll do Auckland next year. We'll do Christchurch in five years. value of something in Auckland. Now, let's just say it's an entry level. Oh, that's kind of a mid-range, $750,000. And in Christchurch, what would a house be worth in five years' time, do you reckon? It might be worth $850,000 to $900,000. Let's say $900,000 in five years' time.
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