I'm a 51-year-old single parent of two children, both of whom have educational disabilities. They also have health issues, which are currently under control. This makes their future earning capacity even less certain than it is for young people in general.

I usually work full-time (which I'd prefer not to do but it seems necessary). When I am working, I've started contributing 8 per cent to KiwiSaver, in which I have about $70,000. I have about $28,000 in a bank account for house maintenance emergencies and for my older child to access quickly should I die (it's a joint account), as she has some costs that need to be funded.

I have both children enrolled in KiwiSaver and they also both have a savings account that I pay into each payday. My former partner, their other parent, pays money towards their care (less than he's meant to but a reasonable contribution). The older child has just turned 16 and I'm afraid she won't get money from her dad after she turns 18. The younger one is 10.

I'm also worried I won't have the energy to keep earning beyond 65, but that's what I need to do as I can see I will need to keep the household going in case one or other of them is under-employed or their health issues flare up.

My house has a $65,000 interest-free family loan against it. It is the family haven but also contains my wealth (bought for just over $700,000 in 2013). I don't feel I'll be selling it any time soon. I have a small credit card debt (about $1000) to pay off. So things are pretty good on the debt front.

My friend said yesterday that she was told she'd need "a million" to retire on. She ignored that as she's a single woman with no dependants, and doesn't spend much. I hate to think how much I'm meant to have.

My mother will move to a retirement apartment soon (and use her house sale to fund it). I'm just mentioning this as I'm planning on the basis that there won't be a sudden influx of funds coming my way in the future.

Any thoughts on how I can best prepare for the future, support my children and enjoy the rest of my life?

A:

My first thought is to be angry at whoever told your friend she needs $1 million for retirement. That's ridiculous.

I often hear those sorts of numbers bandied about - usually by people in the retirement savings industry who just might be a bit conflicted.

It's good to send a wake-up call to people who are saving little or nothing for retirement. See the next reader's letter. But when someone is setting a goal - whether it's for savings or weight loss or getting a qualification - it's important that it be reachable.

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Many people, when told they need $1 million, will dismiss that as impossible and give up. Others will worry themselves sick. Neither outcome is helpful.

The fact is that retiring with $100,000 or $200,000 and a mortgage-free home puts you in a much stronger position than many. Even $50,000 is a lot better than nothing.

You are doing really well, under the circumstances. You've got a good emergency fund. And not many in your situation would save 8 per cent of their pay as well as contributions to their children's savings.

My one recommendation is that you hold back on the kids' savings and the extra KiwiSaver contributions until you've got rid of the credit card debt. You'll be paying way more interest on that debt than the return you earn on savings or in KiwiSaver, so it's best to attack it first. And try not to run up any more debt.

Beyond that, keep doing what you're doing, and please stop worrying. If your children have health problems that restrict their earning, there should be some government support for them. And you could move to a smaller house or a cheaper town in retirement, which would free up a tidy sum.

If you end up working beyond 65, you may find it isn't so bad -- and that many of your friends will join you. In the 2013 Census, a third of people aged 65 to 74 were working part-time or full-time, and that proportion keeps climbing. In the meantime, do what you can to keep healthy, to enable you to keep working.

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And please relax and get out there and have some fun.

Ill prepared for super

I find it startling how many people I know in their early 60s (as I am) who have debt, no savings and are destined for life on a relatively meagre government super.

It is a generational thing, with their (and my) parents basing their financial management on lifestyles that didn't include dining out, foreign travel and flash cars (in many cases any car). My parents lived through the Depression and World War II. They put great store in public transport, public health, home preserving and a productive garden.

But times change, and most hope and expect much more in their years after retirement. Many are not going to achieve it.

It was reading startling warnings by then Retirement Commissioner Diana Crossan more than a decade ago that gave my wife and me our wake-up call. It was only then that we realised an overdraft, credit card debt and a mortgage that we kept drawing against were not going to cut it come retirement time. Different times for different generations.

A:

It seems there are two distinct attitudes to saving for retirement. Some, like today's first correspondent, worry too much. Others, like your acquaintances, worry too little.

I agree that we probably expect more expensive fun in retirement than our parents did. And some people don't seem to realise that means getting out of debt and stacking up some savings. Here's hoping your letter will shake up the ones who need it.

Housing market

I can't understand why you used information from Goldmans in your last column. When I think of that firm I think of its role in the global financial crisis.

As for having information around the New Zealand housing market, well even blind Freddy can see that the market is messed up, especially in Auckland.

However, as someone who has lived here all his life and watched the market dips and swings, I can tell you what will happen. The property market in Auckland will go sideways -- that is, people won't have the money to buy at inflated prices and the demand will slacken. This will in turn cause a slow downward trend (soft landing) until the market finds its sweet spot, resulting in increased buying and selling.

All this information is given using local inside knowledge. Unlike your source, I don't look like an extra from the TV show Suits - no flash wardrobe or corner office above Wall Street and I've never been referred to as a bankster.

A:

I'm no fan of Goldman Sachs' financial crisis behaviour either. And the main point of my comments last week was not that Goldmans says there's a good chance of a "housing bust" in New Zealand, but to reply to a reader's question about how people with large mortgages would be affected by a price fall.

Nevertheless, Goldman's research, based on the ratios of house prices to rent, and house prices to income, seems solid.

The Economist magazine - perhaps a source you'd prefer - looked at similar numbers recently. It says it "gauges house prices against two measures: rents and income. If, over the long run, prices rise faster than the revenue a property might generate or the household earnings that service a mortgage, they may be unsustainable. By these measures house prices in Australia, Canada and New Zealand look high."

And New Zealand topped the Economist's list of 15 countries (including Australia, Britain, the US and the other usual suspects) for all of the following: house price rises, prices relative to rents and prices relative to income.

How about another respectable source - a 2016 International Monetary Fund report on New Zealand?

It says housing supply hasn't kept up with demand, pushing up prices, particularly in Auckland. Nothing new there. But it adds, "While supply constraints do suggest that equilibrium property prices have risen, they do not rule out that demand is excessive, nor that it could fall sharply.

"House prices in New Zealand have varied by more than can be explained by the relatively stable deviation between population and housing supply. The UK, for example, had little supply response in the housing boom of the 2000s, but still saw a 20 per cent fall."

In other words, supply and demand only partly explains house price rises. Over and above that there could be excessive demand - perhaps psychologically driven. And if that changes, house prices could fall a long way.

Sorry, but I give the Economist's and IMF's analysis more credibility than yours.

Passive funds

I noted your recommendation last week of passive or tracker funds. I have been looking for such funds and, despite trawling four companies, and having to deal with their subsequent spamming and "capture" of my contact address, I have not been able to find any.

So what companies in New Zealand actually offer passive or tracker funds?

The managed funds from the companies I have been looking at charge 2.25 to 3.5 per cent "fees", so they would have to get remarkable returns from the market to cover their administrative costs at my level of investment.

If no New Zealand company offers tracker funds at a cheap rate, do you know any Australian companies that offer such funds? I realise that an option is to get US or UK or European tracker funds, but I would like my funds to be invested here.

A:

There are several New Zealand providers of passive funds - also known as index or tracker funds because they invest in the shares or bonds in a market index, and so "track" the performance of the index.

A good place to start is with KiwiSaver. Even if you don't want to invest in KiwiSaver, most providers also offer similar non-KiwiSaver investments.

And according to a survey for the Sorted KiwiSaver fund finder, run by the Commission for Financial Capability, the following providers offer these passively managed funds.

AMP: moderate, balanced, growth and international share funds. ASB: conservative, moderate, balanced and growth funds. Booster: conservative and growth funds. Lifestages: wide range of funds. Simplicity: conservative, balanced and growth funds. SuperLife: all 40 fund options.

Another option is Smartshares, which is owned by NZX and offers non-KiwiSaver passive exchange traded funds. Or you can invest in the huge US passive investing firm Vanguard via New Zealand-based online managed fund service InvestNow.

The fees on these funds should be less than 1 per cent and some are less than 0.5 per cent. You're quite right that fees make a big difference to your returns.

Mary Holm is a freelance journalist, a director of the Financial Markets Authority and Financial Services Complaints Ltd (FSCL), a seminar presenter and a bestselling author on personal finance. Her website is www.maryholm.com. Her opinions are personal, and do not reflect the position of any organisation in which she holds office. Mary's 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 mary@maryholm.com or Money Column, Private Bag 92198 Victoria St West, Auckland 1142. 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.