I'm hoping you can help me with some worrying money and work concerns. My wife and I were made redundant from good jobs within a few months of each other in 2008. We have found it extremely difficult to find new, fulltime jobs in the current economic climate.
I am 64 and my wife is 60. Despite my three tertiary qualifications in management, business and HR and an engineering qualification, with a successful career in industrial sales and marketing, I can count my job interviews for the past three years on both hands.
I have applied for 120 jobs since June 2008 and have become quite despondent about my lack of success, which I am now convinced is due to age bias rather than anything lacking in my knowledge, abilities and experience. I have not made any formal job applications for nearly a year now, thinking it not worth the effort.
We own an eight-year-old house worth about $650,000 which is freehold, have $200,000 in the bank, some in term investments, and my wife has a few shares probably worth about $10,000. We each own modest cars and have no debt.
We were fortunate at the end of 2008 to secure rather dreary, monotonous, part-time jobs well below our capabilities but we are truly grateful to have jobs of any kind. I get paid $16 an hour and my wife gets paid $15 an hour. We have to work extremely long, hard and tiring hours, and we hardly see each other due to our different work shifts (we work weekends too).
Our lives have changed so much for the worse. We are stressed out and our marriage has suffered as a result, and I am frustrated that I have been unable to change our lives for the better since our redundancies.
We seem to be deemed by others - mostly younger people in fulltime employment - as "past our use-by date", yet neither of us feels old and useless. We believe we still have a lot to offer for a few more years yet.
We believe we have no real choice but to carry on. I can't really afford to retire just yet and I don't want to. I am physically and mentally healthy and enjoy working and being useful.
What do you think we should do, Mary? Ideally I'd like to work for myself from home, either doing contract work or running a small business, but I don't know what I should do.
I don't want to make any mistakes and put our capital into any risky ventures.
We have looked at a number of franchise as well as non-franchise businesses but we found that once we had completed the "number-crunching" and due diligence, none of them ever stacked up as viable businesses earning what the vendors said they earned, and not worth the prices asked for them.
So, Mary, we'd be extremely grateful for any suggestions. Neither of us is in KiwiSaver, by the way, mainly because in my case, so close to 65, I didn't think it would be worth it.
Your letter is way longer than I usually run, but every paragraph adds to the rather compelling story.
I'm afraid I haven't got any brilliant ideas on your next step - other than to definitely join KiwiSaver before you turn 65. The way the numbers work, it's a particularly good deal for those over 60ish.
You get the $1000 kick-start free from the Government, plus five years of tax credits of up to $521, for a total of $3605. You also get employer contributions, which over five years will total well over $2000 if you earn $20,000 a year.
To receive the maximum tax credits, you need to contribute $1043 a year. Contributions from your part-time job will go towards that and you can top it up with some of your $200,000 in savings.
After five years, you'll get all your contributions back, plus maybe $6000 to $8000, including returns. And your wife can do the same. It's not life-changing stuff, but $15,000 or so extra can't hurt.
Beyond that, would it work to acknowledge that you are better off than many people who enter retirement and put your energies into volunteering for a cause that matters to you?
You've got heaps to offer and you might find it really rewarding. It could even lead to paid work, because you are out and about and meeting people.
Readers might have other ideas, or stories of what worked for them in similar circumstances. Anyone?
I joined KiwiSaver as soon as it became available and have been in it for four years. I had to give up work for health reasons 14 years ago.
Although I turned 65 in August, I cannot get the money out for another year because of the five-year minimum rule. Are there exceptions to this? My doctor has given me a year to live unless I have an operation.
There is such a waiting list in the public health system that he has recommended having it done ASAP privately. It will cost about $25,000. I have no assets or other savings.
I have managed to organise about $17,000 from family and need another $8000 to save my life - literally. That is exactly how much is sitting in my KiwiSaver account.
Is having a life-threatening condition that can be remedied immediately by surgery grounds for being able to withdraw my money? If so, how do I go about it?
PS: I think others would be interested in the answer to this; for example, paying medical and funeral expenses when such emergencies arise.
You can withdraw all or part of your KiwiSaver money - including employer and government contributions - if you suffer "serious illness". Under the KiwiSaver Act, this is defined as injury, illness or disability that either:
* "Results in the member being totally and permanently unable to engage in work for which he or she is suited by reason of experience, education, or training, or any combination of those things."
* "Poses a serious and imminent risk of death."
If your case doesn't qualify, I don't know what does. Ask your KiwiSaver provider for an application form.
You'll need to get your doctor to fill out some information and you'll have to sign the application in front of a justice of the peace, lawyer or similar. But, hopefully, the process shouldn't be too burdensome.
Let me know if you have any problems. All the best.
Rising markets the best
I was interested to read last week the query from the person who had invested in the Fidelity Options fund. I am surprised about the number of people concerned that their KiwiSaver funds are going down in the short term when, as you have always emphasised, KiwiSaver is a long-term investment.
Normally when we buy anything we like to think we are getting a bargain. Therefore, it is great when you can invest your KiwiSaver contributions when the price of the various funds and markets is down.
As people are investing regularly, the ideal situation is for the markets to stay down so you are buying cheap and hope that they will pick up in the last five to 10 years of your investment. Or am I missing something?
Obviously people need to be careful that their fund is not going to collapse completely.
I certainly agree that people have to get used to seeing their KiwiSaver balances fall sometimes.
While higher-risk funds tend to be particularly volatile, even low-risk ones have off years. This is especially true if they have invested in longer-term bonds, whose values fluctuate with changing interest rates.
On your next bit, though, it seems you are indeed missing something. When we buy strawberries, bargains are good. But we don't keep a stock of strawberries purchased over earlier years that we plan to sell after we retire. In KiwiSaver we do and that makes all the difference.
Let's say, for simplicity, that 25-year-old Bill has invested in one of the riskier KiwiSaver funds that holds a wide range of shares. Assume annual contributions from him, his employer and the Government total about $3000.
In his first year or so, it's not too bad if the sharemarket falls. As you say, his new purchases will be at lower prices. However, over the years his account will grow, changing the situation.
What happens when his balance reaches $50,000? If the sharemarket has a really good year after that, growing 10 per cent after fees and taxes, his balance will grow by $5000. Meanwhile, it's true that his contributions will buy fewer new shares than if the sharemarket hadn't grown at all, but the $5000 growth will more than offset that.
And when his balance is $100,000 or $200,000, there will be even more offsetting.
Another way to look at it: the faster Bill's balance grows during his early years in KiwiSaver, the bigger will be the effect of long-term compounding. If he has $30,000 at the end of year five, he will end up with twice as much in retirement as he would if he had $15,000 at the end of year five.
It's always better if the markets are growing. If you are making regular contributions over the years, the fact that you get good buys with your new money when markets are down is some consolation, but rising markets are preferable.
Blame loose translation
Enjoy your column. Excuse the pedantics, but here's the source of the Voltaire quote that isn't really a Voltaire quote: www.quotationspage.com/quote/331.html
Hmmm. That website says: "Voltaire probably never said these exact words." But it goes on to say that he did write: "Monsieur l'abbé, I detest what you write, but I would give my life to make it possible for you to continue to write."
If that was Voltaire's thinking, maybe he did also write: "I do not agree with a word you say, but I will defend to the death your right to say it" in one of the more than 20,000 letters that Wikipedia says he wrote, but the quote hasn't surfaced lately. Or perhaps he said it as opposed to writing it. Or perhaps - given that he probably usually spoke and wrote in French - loose translation is to blame.
Anyway, who cares? It's a wonderfully thought-provoking line. To use another famous quote that wasn't actually said - this time by Humphrey Bogart in Casablanca - play it again, Sam.
Mary Holm is a freelance journalist, part-time university lecturer, member of the Financial Markets Authority board, director of the Banking Ombudsman Scheme, seminar presenter and best-selling author on personal finance. Her website is www.maryholm.com. Her advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it. Send questions to firstname.lastname@example.org or Money Column, Business Herald, PO Box 32, Auckland. Letters should not exceed 200 words. We won't publish your name. Please provide a (preferably daytime) phone number. Sorry, but Mary cannot answer all questions, correspond directly with readers, or give financial advice.