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OPINION:
Q: I will shortly reach 95 years of age, at which my life insurance policy will mature and I will receive $67,000.
I live in a retirement village rental, still drive and am in reasonable health despite some issues to be expected at my age.
I'm thinking of gifting $30,000 each to my two grandchildren who have young families and mortgages.
I will update some household items. I also have a $10,000 bank deposit, and 11,560 Stride Property shares which if sold could fetch about $28,000. So all up I could have about $44,000 to cover health emergencies, car replacement etc. I'd like a better return than what the banks are currently paying.
My son suggests that because there's little chance I will spend much of this and the residue will go to my granddaughters, I could take some risks with whatever investment I choose. What do you think?
A: I hope you won't mind my saying that your letter made me think of the 1964 song by Jan and Dean, The Little Old Lady From Pasadena. She drove a car wildly and I like to think of you making some wild investments in shares. Go for it — but only with some of your money.
Received wisdom says share investments should be with money you don't plan to spend until 10 or more years have passed. That gives plenty of time for recovery from a sharemarket crash. Generally I agree with that.
And while it sounds as if you could well be still with us a decade from now, I don't suppose we should count on it! So the safe reply to you would be to accept low bank returns, and hope they will creep up a bit in the next few years.
On the other hand, it sounds as if you would enjoy dabbling in the sharemarket. And why shouldn't you? It's your money.
I assume your day-to-day costs are covered by NZ Super. Most people your age say that's enough.
Health costs are potentially a worry, depending on whether you have health insurance.
While the health system would take care of you if you don't, if I were you I would want, say, $40,000 or $50,000 set aside in case you want faster or more comfortable health services.
Car replacement? You can estimate how much and when you expect to need that. The car and health money should stay in bank accounts, so it's definitely there whenever you need it.
That leaves us with the money for your granddaughters. I'm sure you would get pleasure out of giving to them while you're around. But how about making it, say, $10,000 each at this stage, with the rest in your will?
The Pasadena lady "drives real fast and she drives real hard. She's the terror of Colorado Boulevard". Let's see you become the terror of the online share traders!
Your granddaughters might end up inheriting lots more than they would otherwise. Or lots less. If it's the latter, I would hope they appreciate that grandma had some fun with the money.
Q: Loved your first answer last week regarding "you can choose how much of your spending is essential", and particularly the reference to FIRE (financial independence, retire early) and being proud of low spending on day-to-day items. I've spent $750.54 on clothing since November 2017, and am ashamed of that figure compared to some others I know!
But I do think you were a little too excited about the possibility of the woman's husband working well into his seventies. It's great to have the option if it's what you want, but there didn't appear to be such a desire in the original letter. Some people would prefer to retire before 70! Or much earlier, as in the case of the FIRE community.
I'd be very interested to know, of the fast-growing number of older people still working, how many are doing so out of financial necessity, versus those who actually want to keep at it.
A: I'm intrigued that you know your clothing spend down to the nearest cent. I assume your shame is because some would say you've spent too much, rather than too little.
I once heard of a woman who wore the same dress everywhere. I assume she had two of them, so she could wash one. But it was her statement about the fashion industry. And she had a point. Most of us need far fewer clothes than we buy.
On whether last week's correspondent's husband wants to work into his seventies, he's only in his early fifties now, so it's probably too early to say.
But it's certainly a trend. The Retirement Policy and Research Centre at the University of Auckland steered me towards several reports on this.
One report, from the Commission for Financial Capability (now Te Ara Ahunga Ora Retirement Commission) in 2019, says, "New Zealand has one of the highest rates of people aged 65-plus still working, at 24 per cent. This compares to the UK rate of 10 per cent, Australia 12 per cent, USA 19 per cent, Japan 20 per cent and Iceland 35 per cent." Thirty years ago, New Zealand's number was 9 per cent.
Looking just at people aged 65-69, 44 per cent still have jobs, said the commission.
And the trend is upwards. By 2038 the commission estimates that one third of all people over 65 — including those in their 70s, 80s, 90s and beyond — will still be working.
Do the 65-plusers still in the workforce want to be there?
In a 2016 survey by the commission, 54 per cent gave "financially need to continue working" as their main reason to work past 65. About 36 per cent said "value and satisfaction from work" and 10 per cent gave other answers.
However, when asked for other reasons to keep working, more than half said "ability to use my skills and talents" and nearly half said "social contact", while 40 per cent said "chance to do a job that is worthwhile". It doesn't seem that vast numbers hate the idea of continuing to work.
Still, people had concerns about working past 65. Nearly half said, "missing the opportunity to do other things while still able". And about one third said each of these: "Being treated as an older person"; "energy levels"; "physical strength and ability"; and "length of hours and limited free time".
Perhaps we can sum it all up as "mixed feelings" for many.
Q: Your first item in last week's column, the "house or baby" question, left me "spluttering".
When I gave this sceptical reaction some thought, I wondered if this was just the outburst of an older "you've never had it so good" boomer?
Yep, your young family couple can, if they are prepared to work for it, have both the No 3 bubbie (we had four) and a house. Dad can get a paying part-time job, as well as his full-time one, and save for the house. We did and it worked.
Here is one suggestion. A small ad in the local paper would bring many inquiries from older people who would like some light gardening and landscaping done. Equipped with a small trailer and some household tools this could prove to be a goldmine ... and a fitness plus too.
My suggestion of the landscaping prospect is based on my recent experience in trying and failing to get a small ($5000) landscaping job done.
Local gardening-mowing landscaping firms reported that "they have no contractors in my area" ... more splutters. These firms' rates generally approach over $50 per hour, and with project design and landscaping plans thrown in, such contracts can fetch premium rates. On a good weekend a net $1500 after tax is not out of the question.
Sure it is hard work but that is my very "sceptical-spluttering" point. If you really want it, then toughen up and just go do it.
A: Thanks for an idea that might work well for some. Your broader points, I suppose, are that there's work out there if you think about what others need, and that you can get a long way with determination.
On the other hand, it's not ideal for a father to work so hard that he sees little of his children.
And I have to add that if you are a boomer, you indeed had it much easier than the young these days, despite high interest rates back then.
Q: Some retired correspondents in your column have mentioned the delay in taking savings out of KiwiSaver.
As a justice of the peace (JP), I witness people's applications for withdrawals. As far as I know, you have to make a declaration for every withdrawal, so this really stops you using it like a bank account.
A: When you first withdraw from KiwiSaver after turning 65, you have to sign a statutory declaration, witnessed by a JP or other official. This includes information on periods when you were living overseas and therefore ineligible for government contributions. This form may take a week or two to process.
At that time, or later, it seems that most providers will let you set up a regular withdrawal — for example $500 a month — into your bank account, without any ongoing form filling.
You can also withdraw a lump sum at any time. A quick online search suggests you have to fill out a form each time you do this, but after your first withdrawal the forms look fairly straightforward and you don't have to get your signature witnessed. You should receive the money within a few days.
Let's hear from anyone who has found that accessing their KiwiSaver money after 65 is more complicated than that.
Q: My husband and I have both taught at state secondary schools for decades — mostly middle decile and one very low-decile rural school (which both our children attended and received very good educations and have secured excellent careers/happy adult lives, despite having rubbed shoulders with the "wrong crowd" haha. In fact you could say "because of").
State schools provide many opportunities for their students. There is in no way a correlation between good teachers and high decile or private schools. In our experience the success of a student comes mostly from home encouragement and support.
I don't need to elaborate as you have already said it all so well. Thank you very much. I can't tell you how gratifying it is to read such thoughtful and true words written about education in New Zealand.
A: And thanks to you for writing. I love your "because of" comment. It's probably good for everyone if children mix with others from really different backgrounds at school. Surely that's part of education.
Q: Seventy-five years ago I started school at the public Te Papapa Primary School in Mt Smart Road, Ōnehunga. Also attending this school was a young boy called Jim Farmer. He turned out to be a Queen's Counsel.
A: And we could list many, many other New Zealanders who have made big contributions who attended state schools. Let's just settle for one, Nobel Prize-winning physicist Ernest Rutherford. Wikipedia says he attended Havelock School and Nelson College.
Okay, that's probably enough letters about schooling. Thanks for all the contributions.
Q: Love your column for handing out advice without the usual endless disclaimers and caveats, ie "This advice is fit for no particular purpose and any problems for any reason are yours alone mate!" so beloved elsewhere. Thanks and cheers.
A: Hmmm. Have you read the bit right below this, where I say that I'm "not responsible for any loss that any reader may suffer from following" my advice? That's important, especially when I see how some people misinterpret what I say! Still, I suppose it's only one sentence.
- Mary Holm, ONZM, is a freelance journalist, a seminar presenter and a bestselling author on personal finance. She is a director of Financial Services Complaints Ltd (FSCL) and a former director of the Financial Markets Authority. Her opinions do not reflect the position of any organisation in which she holds office. Mary's advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it. Send questions to mary@maryholm.com. Letters should not exceed 200 words. We won't publish your name. Please provide a (preferably daytime) phone number. Unfortunately, Mary cannot answer all questions, correspond directly with readers, or give financial advice.
OPINION: Turns out the human brain is not well evolved to handle money.