News | Features
17 Aug 2022 22:38
NZCity News
NZCity CalculatorReturn to NZCity

  • Start Page
  • Personalise
  • Sport
  • Weather
  • Finance
  • Shopping
  • Jobs
  • Horoscopes
  • Lotto Results
  • Photo Gallery
  • Site Gallery
  • TVNow
  • Dating
  • SearchNZ
  • NZSearch
  • Crime.co.nz
  • RugbyLeague
  • Make Home
  • About NZCity
  • Contact NZCity
  • Your Privacy
  • Advertising
  • Login
  • Join for Free

  •   Home > News > Business > Features

    So Much For The “Can’t Afford To Save” Excuse

    Practically all New Zealanders can save. If they want to. In the wake of the release of the Savings Working Group (SWG) report on February 1, various people have been saying that many New Zealanders just can’t afford to save. I don’t buy it – or should I say save it.


    It started after Kerry McDonald, chair of the SWG, said at a press conference, “If you’re an average New Zealander, your income is not going to let you do much saving anyway.”

    That single sentence, taken out of context from a press conference, was used in various broadcasts and articles, often accompanied by “ordinary” people saying they couldn’t spare any money. You could almost hear non-savers around the country saying, “Phew, that lets me off the hook.”

    As a member of the SWG, I know what McDonald meant – that we don’t expect the person in the street to start stashing away thousands of dollars. That’s why the country needs to come up with other ways to quickly make our economy less vulnerable.

    However, that doesn’t mean non-savers cannot set aside a dollar a day, and increase the amount whenever their income rises or their expenses fall. Over the long haul – with interest or other returns compounding – they could noticeably boost New Zealand’s total savings. And in any case they will boost their own wellbeing.

    I should note here that some experts say the only people saving too little for retirement are middle-income New Zealanders. The rich can look after themselves, and the poor earn less than NZ Super, so their income will actually rise when they qualify for Super.

    But the question every non-saver might want to ask themselves is: “Do I want to be in that last category – looking forward to a retirement with no luxuries?”

    If not, the wise thing to do is join KiwiSaver. If you are an employee, you contribute at least 2 per cent of your pay a year – for many, not much more than a dollar a day. On $30,000 a year, it’s less than $12 a week. On $50,000 it’s less than $20 a week.

    And you have to contribute for only a year. After that, you can take contributions holidays all the way through to retirement.

    What do you gain from a year of doing without a bit of change? A $1000 kick-start; a contribution from your employer equal to what you contribute; plus a government tax credit that also equals your contribution, up to $1043 a year.

    Someone on $30,000 a year puts in $600, their employer puts in $600, and the government puts in $1600, for a total of $2800. On $50,000 it’s $1000 plus $1000 plus $2000, totalling $4000.

    After the first year, it’s not quite as good because there’s no kick-start. Still, everyone earning less than $52,150 will see their own 2 per cent contribution tripled year after year. On higher incomes, their contribution is way more than doubled.

    What about the self-employed, beneficiaries and other non-employees? You can contribute zero with some providers, and still get the $1000 kick-start. But it’s wiser to contribute up to $1043 a year – or $20 a week – to get the maximum tax credit.

    While you miss out on employer contributions, your money is still doubled – still well worth doing.

    Two or three times as much money going into an account means two or three times as much coming out the other end. It’s a terrific boost to savings, and I hate to see those on lower incomes, in particular, missing out.

    Rather than being unable to save, non-savers can’t afford to miss out on KiwiSaver.

    © 2022 Mary Holm, NZCity

     Other Features News
     10 Sep: Spring clean your finances
     13 Aug: Plan ahead to give yourself a debt-free Christmas!
     10 Jul: Wise up to clear credit card debt
     07 May: Ways to prepare for the unexpected
     30 Mar: Time for a financial progress check
     10 Feb: Studying up on NZ Super
     10 Jan: Managing the back-to-school bills
     Top Stories

    RUGBY RUGBY
    NZR boss Mark Robinson is welcoming the elevation of Joe Schmidt's role within the All Blacks More...


    BUSINESS BUSINESS
    The biggest jump in median weekly earnings since records began ... haven't closed the gender pay gap More...



     Today's News

    Politics:
    The Prime Minister insists there's a way back into Labour's good books for Gaurav Sharma  21:49

    Entertainment:
    Michelle Branch has reportedly filed for divorce from her estranged husband Patrick Carney and is said to be requesting custody of their children and child support 21:42

    Christchurch:
    Cars at a scrap metal yard in Christchurch have gone up in flames 21:19

    Entertainment:
    Nicholas Evans, the much-loved writer of 'The Horse Whisperer', is dead aged 72 after suffering a heart attack 21:12

    Living & Travel:
    The Loop: Scott Morrison dismisses calls to resign, the NSW flood inquiry's urgent recommendations, and a dog's amazing cave rescue 21:09

    Entertainment:
    Johnny Depp is set to direct his first film in 25 years, about an artist who died broke 20:42

    Entertainment:
    The Duke and Duchess of Cambridge will reportedly not have their long standing live-in nanny at their new downsized home 20:12

    Entertainment:
    Anne Heche will receive an Honour Walk after being taken off life support nine days after she was critically injured in a fiery car crash 19:42

    Entertainment:
    Hollywood legend Gina Lollobrigida will run for Senate in Italy's election next month 19:12

    Rugby:
    NZR boss Mark Robinson is welcoming the elevation of Joe Schmidt's role within the All Blacks 18:59


     News Search






    Power Search


    © 2022 New Zealand City Ltd