North Shore Times (New Zealand)
Millennials and retirement
Millennials have redefined the way we look at life.
They are tech-savy multitaskers, demand instant gratification and recognition, yet seek the flexibility of a work-life balance rather than be the slave to the boss their parents might have been.
But they also suffer from the age-old frailties of mankind falling for advertising that gets them into uncontrollable debt; obtaining qualifications that won’t provide a rewarding lifestyle; getting into business with the wrong business partner; buying stuff they don’t need to impress the wrong people; and not understanding how money works.
Most (like their parents) have no idea of how much they may need in retirement. After all it isn’t an immediate concern is it? That trip to Thailand or the new car are far more pressing, right?
When we travel on our own, we like to have a map of where we’re going, we research our destination, and sort out what we want to see and do. So why, for something as important as having a decent and healthy life after working for 45 years, wouldn’t you want to have some sort of plan, goal and implementation of means to meet that?
But we have Kiwisaver! Have you ever wondered why countries such as Aussie and Germany require much greater superannuation contributions? Put simply, for many people KiwiSaver contributions won’t be enough to give you 25 years of lifestyle after you retire.
National Super will disappear. It won’t but it will change. Increasingly, it looks likely that you will collect this later than 65, perhaps at age 67. Most people can survive happily on 70-80 per cent of their pre-retirement incomes. The question for millennials is, what will that figure be?
Lotto? Odds of winning division one are 38,383,000 to 1. Of course, mum and dad could leave you a chunk of their hardearned money. Isn’t that what’s meant to happen? The fact is that your mum and dad baby boomers see no reason to leave you anything, as they never saved enough themselves and want to do a lot of the things you would like to do. Mum and ad can now borrow against their home, make no loan repayments (Reverse Equity Loans), and/or sell down to spend equity on themselves, leaving just enough to save you the cost of their funerals.
Disclosure: Care has been taken to ensure that any information is accurate. No liability is accepted for its use. Enquiries are welcome. Experienced in lending and risk advice and planning, Allistar Walker is a Registered Financial Adviser, Senior Fellow of Financial Services Institute of Australasia and director of IFL Associates Limited. His full disclosure is available free at www.mortgagehelp.co.nz or he can be contacted at 09 410 6023 or enquiry@mortgagehelp.co.nz . Blog site www.alsoup.blogspot.co.nz