Into Retirement and Beyond!
Into Retirement and Beyond!
When Buzz Light Year shouted “Into Infinity and Beyond” we often think about how KiwiSaver is becoming much more than an investment vehicle for saving for retirement. In Australia, the main investment vehicle for Australians as they save for retirement is their Superannuation Scheme. But once they retire, they keep their Super Fund as their main long term investment option.
When KiwiSaver was first launched in July 2007, Kiwi’s had to close their KiwiSaver funds and reinvest their balance somewhere else once they reached retirement age (currently 65). This rule was changed a few years ago to allow Kiwis to keep their KiwiSaver account and use this as their long-term investment option once they retire.
At Isbister Partners we often discuss with retirees how long they might live for and how they plan to keep on investing in long term investment assets, if nothing else to ensure that a portion of their long-term assets keeps pace with inflation. People often ask what proportion of their assets they should keep in growth assets upon retirement? A rough rule of thumb might be to take the number 100 and take away your age. So, a 70-year-old might look at investing 30% of their assets in growth assets. Obviously as you age your requirements change. Other considerations to take into account such as risk capacity and risk tolerance come into the mix, but it is a good place to start.
KiwiSaver is increasingly used by retirees as their long-term investment vehicle of choice. Every year the Retirement Commissioner studies trends within KiwiSaver. They engage actuarial firm MJW to do this work. We noted that this year over 180,000 Kiwi’s aged over the age of 65 were still in KiwiSaver. This segment is growing at over 8% per annum. There is also a growing cohort of Kiwi’s fast approaching 65 (there are over 777,000 kiwis aged over 50 who are members in KiwiSaver) as at 30th June 2023. We believe that this a rational investment strategy for Kiwis.
What is not to like about KiwiSaver? The fees are reasonable, an independent custodian holds the assets, there is an independent supervisor that reports to the Financial Markets Authority (FMA) who is the government regulator and a growing pool of assets that is over $110bn. We believe that KiwiSaver will become Kiwi’s investment of choice throughout their life. It’s one of the reasons why we have spent so much time focusing on how we deliver more innovative investment solutions for Kiwis.
Watch this space over the next six months as we develop new KiwiSaver options. If you would like to discuss how KiwiSaver might form the basis of your investment journey over your lifetime please contact us by using the link below.
Happy investing!
Disclaimer: This newsletter is meant to be informative and engaging, hopefully not a cure for insomnia. Please don’t take this as personalised financial advice. Discuss your situation with an Advisor. This is where I need to say past returns are no guarantee of future returns.
