While it’s great to start investing when you’re young – so you can really benefit from compounding returns over the years – it’s never too late to start.
People in their 40s, 50s and even their early 60s can take advantage of the KiwiSaver incentives to boost their savings. Even if you are, say, 62 and not employed – so you don’t get the employer contributions – you can still receive three years of government contributions, totalling $1,563. That’s a good bonus for your retirement savings.
What about older people? Anyone of any age is now eligible to join KiwiSaver, and many people over 65 are finding the scheme useful, as they can withdraw KiwiSaver money whenever they want to.
You don’t receive government contributions when over 65, and compulsory employer contributions also stop, but some employers continue to contribute.
Retired people should keep their shorter-term spending money in a low-risk KiwiSaver fund, but might want to put money they plan to spend in ten years or more in a higher-risk fund.
These days, with many people living into their 90s, it makes sense to use the full range of KiwiSaver funds when you’re in early retirement. As you get older, gradually reduce your risk.
Other types of investments can also work well for not-so-young investors. These include a diversified portfolio of shares for longer-term money, and non-KiwiSaver managed funds.
Many New Zealanders invest in rental properties, which can also work well. But once you get to retirement you can’t gradually spend the money you’ve invested in a property, whereas you can sell off some shares or some units in a managed fund. So perhaps sell the rental at retirement.
Many older people find it useful to use the services of an adviser. A good one will consider all your needs and come up with a workable plan for you.
This content is reproduced from ‘Hits and Myths: an introductory guide to investing by Mary Holm’.