KEY POINTS:
Mature workers aged in their 50s and 60s should be joining the KiwiSaver work superannuation scheme as soon as possible, says financial expert Martin Hawes.
"I think there is an urgency for older people which is not quite there for the young," he says. "For older people they really should get on with it, particularly those in their 60s under the age of 65. If they are 64 and 364 days, they'd better do it right now."
The author of Twenty Good Summers has been running retirement planning seminars with Westpac, which has established itself as one of the most popular KiwiSaver providers.
"To me it's a no-brainer, especially for those in their 50s and 60s," says Hawes. "Hopefully the mortgage is gone. Even if not, these people are at the peak of their earning capacity."
The older generation can lead the way with KiwiSaver, he says. Figures recently released show a high number of those signed up are under the age of 18. "This is people like me signing up children and grandchildren."
Retirement Commissioner Diana Crossan says people in their 50s and 60s should view KiwiSaver as an enhancement to their income.
"I think KiwiSaver was set up for young people, but it's a bit of a windfall for older people, particularly those between 60 and 65 who would have planned for themselves already."
She's pleased with the take-up by people in their 50s and 60s. The latest figures show around one-third of those who have joined KiwiSaver are young people, one-third are middle-aged and the rest are 50-plus.
KiwiSaver is still a big concept for the older generation to take in. "One thing they bring up is complexity," says Crossan. "They don't know what to do, there are too many providers, how do you choose?"
Management fees are a problem for some, and another question Crossan hears from older people is how will a change of government affect KiwiSaver?
"We see no appetite [for change] among the political parties," says the commissioner.
KiwiSaver is going to be particularly good for women of a certain age, predicts Crossan. "I think KiwiSaver will attract women, particularly of an older age, because it's something they can manage. The whole concept was set up for middle New Zealand, and 4 per cent [the minimum salary contribution] is manageable."
Crossan supports people working past 65 and says workers who stay in the labour market will have employers continuing to make contributions. Working past 65 makes sense for many people.
"It also means you are not eating into your savings, you're still saving."
There is more education to be done on KiwiSaver, particularly with older people who lived through the 80s sharemarket crash and now the finance company problems.
Westpac, which has won about one-fifth of the Kiwi-Saver business so far, has been on the road explaining the scheme to clients.
Keith Vaughan, Westpac's South Island wealth area manager, who has run a series of retirement planning seminars, says: "A lot of people 55-plus have not done anything about KiwiSaver. They are still mystified over the process. What came up strongly was the terminology - they don't understand things like tax credits."
To the risk averse, he has been telling them about Westpac's capital protection plan investment product, which has an extra 0.8 per cent fee calculated on the daily balance. Having capital protection is appealing to some investors.
The kind of KiwiSaver investment fund older workers should go for is a topic of debate in the finance industry.
AMP has designed products for KiwiSaver members who don't want to think too hard. Roger Perry, general manager of product, says the company's Lifesteps scheme reallocates investments over the years, depending on age and risk to reduce exposure as the person gets older.
While some say a 60-year-old should have some growth fund in their scheme, Perry is cautious. "Their capacity to recover from a downturn in financial markets is not great." Managers taking care of older age groups, should "err on the side of conservatism", he says.
Senior financial adviser at Spicers Wealth Management, Jeff Matthews, believes people should not be too conservative at 60-65.
"I would argue that you should still go into a balanced fund,"he says. A balanced fund might have 50 per cent fixed-income products, and 50 per cent property and shares.
Lisa Dudson, financial adviser with Acumen, says no fund is going to be terribly risky. "Superannuation funds are conservative by the fact they are superannuation funds."
Dudson is directing clients who ask for advice to go to ING's KiwiSaver funds, largely because it won fund manager of the year.
"They have got a couple of good balanced funds and their products are easy to understand."
If older workers have any hesitation, they should "get over it" says Dudson, or they will just sit there doing nothing. "We all know how to lose weight, it's not rocket science, however the population is growing in size. In the same way people know how to save but are they doing it?"
Raewyn Fox, chief executive of the Federation of Family Budgeting Services, is in her mid-50s and has joined KiwiSaver.
Fox has two other retirement saving schemes but says: "Everybody has to make their own decision. It's more of a personal issue than age. You get brave 60-year-olds and conservative 20-year-olds."
KiwiSaver for the over-60s
* A 60-year-old earning $50,000 who contributes 4 per cent fortnightly to KiwiSaver (+ 2 per cent average employer contributions over five years) may save $27,155 by age 65.
* A self-employed 61-year-old contributing $25 a week to KiwiSaver (with no employer contributions) may save $13,640 in five years.
* A 63-year-old contributing $20 a week to KiwiSaver (with no employer contributions) may save $12,122 after five years.
Note: Over-60s must lock in funds for at least five years and must contribute $1040 per annum, or $20 a week, to get the $1042-a-year tax credit. Examples include a $40-a-year fee subsidy.
Source: Sorted.org.nz
