Retirement and Superannuation
The Baby Boom Effect
The baby boom generation is moving into retirement. This means that over the next ten years the number of people retired will begin to be more than the number of people working and paying taxes.The baby boomers are living longer. They will expect to collect Superannuation for longer, and their savings will have to last longer.
Superannuation is a Political Football
Given the trends discussed above it is my belief that Superannuation will continue to be a political issue.Any government can do a mix of four things to your superannuation: pay you less; make you qualify older; make it harder to qualify, and make you save more before you retire.
Kiwisaver is just that- a strategy to make you save more before you retire.
NZ Government Super
NZ Govt. Super pays $393.56/wk for a married couple, and $255.81/wk for a single person. Can you live on this much?Superannuation Charges
I have seen figures that estimate the average New Zealand superannuation fund from one of the insurance companies charges 2-3 per cent in fees and expenses. This makes returns barely better than bank deposits. In other countries, pension contributions come from pre-tax income, not post-tax income as they do here.Kiwisaver has effectively made these schemes obsolete.
Income and capital gains on pension funds in many overseas countries are tax-free.
In the past this has not been the case here.
Its not surprising Kiwis prayed to the property God for retirement.
Tax Changes for Investment
The new PIE legislation coming into effect in October 2007 has changed this. The top tax rate for Portfolio Investment Entities (PIEs) will be 30%. This, coupled with the fact that no further tax will be due on distributions from a PIE, is likely to make them more attractive to both investors and certainly very tax effective for investors on the 39% tax rate.
Best Way to Save for Retirement
"Avoid those superannuation schemes promoted by the big companies. These schemes will make you poor." Even if they benefit from the PIE legislation the costs and poor management hidden inside these schemes make them a very poor investment.CLICK HERE to learn how I recommend you save for retirement.
Unsolicited Electronic Message Act 2007. Requesting one of my free reports will also subscribe you to my email newsletter service. You can unsubscribe from my email newsletters at any time by replying to this email or a newsletter with “Unsubscribe” in the subject line.
| ::about me:: | ::legal and disclaimers:: | ::contact information:: |