Hawkes Bay Today
  • Hawke's Bay Today home
  • Latest news
  • Sport
  • Business
  • Opinion
  • Lifestyle
  • Property
  • Video
  • Death notices
  • Classifieds

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • On The Up
  • Sport
  • Business
  • Opinion
  • Lifestyle
  • Property
    • All Property
    • Residential property listings
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology

Locations

  • Napier
  • Hastings
  • Havelock North
  • Central Hawke's Bay
  • Tararua

Media

  • Video
  • Photo galleries
  • Today's Paper - E-Editions
  • Photo sales
  • Classifieds

Weather

  • Napier
  • Hastings
  • Dannevirke
  • Gisborne

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Hawkes Bay Today

Rethinking retirement - why playing it too safe could cost you: Nick Stewart

Hawkes Bay Today
15 Nov, 2024 05:00 PM5 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌

Subscriber benefit

The ability to gift paywall-free articles is a subscriber only benefit. See more offers by clicking the button below.

Already a subscriber?  Sign in here
Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

Many conservative retirement investors are barely keeping pace with rising costs, writes Nick Stewart.
Many conservative retirement investors are barely keeping pace with rising costs, writes Nick Stewart.

Many conservative retirement investors are barely keeping pace with rising costs, writes Nick Stewart.


Nick Stewart is a financial adviser and CEO at Stewart Group, a Hawke’s Bay-based financial planning and advisory firm.

OPINION

Retirement investing in New Zealand has always favoured playing it safe. The conventional wisdom was clear: At 65, switch to conservative investments to protect your nest egg.

But when it comes to applying this traditional view to today’s reality, there’s a sticking point - we’re living significantly longer than before, gaining roughly two years of life expectancy every decade. For a healthy 65-year-old Kiwi today, living into their 90s isn’t only possible; it’s increasingly probable.

Open up the latest news from Hawke's Bay

Get daily Hawkes Bay headlines straight to your inbox.
Please email me competitions, offers and other updates. You can stop these at any time.
By signing up for this newsletter, you agree to NZME’s Terms of Use and Privacy Policy.
Advertisement
Advertise with NZME.

This dramatic shift in longevity demands a complete rethink of retirement investing. We’re no longer planning for 10-15 years of retirement. We’re looking at 25-30 years, or more.

This ‘third age’ of life (as my late friend and retirement guru Barry LaValley called it) requires a fundamentally different investment approach than what might have worked for our parents’ generation.

Consider this scenario: A 65-year-old Kiwi couple retires with $500,000 in savings, plus their mortgage-free home and NZ Superannuation. Following traditional advice, they move most investments into term deposits and conservative funds.

Advertisement
Advertise with NZME.

It seems prudent – until you factor in inflation, increasing living costs, and the reality of a 30-year retirement horizon.

Even with today’s improved term deposit rates around 5% ... after tax and inflation, many conservative investors are barely keeping pace with rising costs. This means your purchasing power could be slowly eroding, right when you need it most.

The past decade has delivered a masterclass in why conservative strategies might not be as “safe” as they seem. Despite multiple market downturns (including a 31% drop in 2020), high inflation rates, and significant interest rate fluctuations, well-diversified and growth-oriented portfolios not only survived but thrived. Research shows that investors who maintained a higher allocation to growth assets generally ended up with significantly more wealth than those who played it “safe”.

Kiwi retirees have a unique advantage that could allow them to take a more growth-oriented approach: NZ Superannuation. This universal pension provides a reliable income base that many other countries don’t offer. Think of it as your “conservative” allocation – it’s essentially a government-backed bond, paying you fortnightly for life.

This system means you may be able to take more investment risk with your savings than you initially thought. The Super payments can help cover basic living expenses, while your investment portfolio can focus on growing to fund your lifestyle goals and protect against inflation.

Rather than going all-in on conservative investments, consider this three-part approach:

1. Create a Cash Buffer

Keep 1-2 years of expected withdrawals in cash and short-term fixed interest. This provides security and means you won’t be forced to sell growth assets during market downturns.

Advertisement
Advertise with NZME.

2. Include Growth for the Long Game

Consider keeping a significant portion of your remaining portfolio in growth assets. This might feel uncomfortable but remember – you’re not just investing for the day you retire, but for potentially decades beyond.

3. Choose Smart Diversification

Spread your growth investments across NZ shares, international shares, listed commercial property, and a mix of small, value and growth companies.

For example, let’s say you have $500k in retirement savings. Instead of the traditional conservative split, you might consider:

· $75,000 (15%) in cash instruments for immediate needs

· $125,000 (25%) in high-quality bonds for medium-term stability

· $300,000 (60%) in a diversified mix of growth assets

This exposes you to more risk than the traditional approach but has a higher growth potential, and with smart diversification, won’t be as subject to the whims of local or global markets.

There’s another angle to getting your ducks in a row that people don’t often like to think about: The impact of cognitive decline.

An overlooked aspect of retirement planning is preparing for how our decision-making abilities might change as we age. Research shows that financial decision-making capability typically peaks in our 50s - yet many of us will need to manage our retirement portfolios well into our 80s or 90s.

This presents a critical challenge. The longer we live, the more complex our financial decisions become. Yet, our ability to make these decisions may decline just when we need it most.

Conditions like dementia, which affects around 10% of Kiwis over 65 and nearly one-third of those over 85, can severely impact our financial judgment long before we (or our families, in many cases) notice other symptoms.

It’s not just Kiwis at risk. For a global comparison, Britain has 2.38 million citizens with a cognitive impairment. We aren’t an outlier by any means.

This vulnerability makes independent financial advice crucial. A qualified adviser serves as a cognitive backup system, providing clear-headed analysis when our own judgment might be compromised. They can help protect against financial exploitation, and maintain investment discipline during market volatility.

The retirement landscape is changing dramatically. The real risk isn’t just that your portfolio might fall 20% in a market downturn – it’s that being too conservative might mean running out of money in your later years, or that cognitive decline might impact your decision-making when you’re most vulnerable.

For many Kiwi retirees, the path to a more secure retirement involves embracing appropriate levels of growth investment, building a robust yet flexible financial plan, and establishing a trusted relationship with an independent financial adviser early.

With NZ Super providing a stable base, a well-thought-out portfolio strategy, and professional guidance, you can build a retirement plan that doesn’t just preserve your wealth – but gives it the best chance to grow and support you throughout your retirement years.

Remember, retirement planning isn’t about eliminating all risk – it’s about managing the right risks, in the right way. Sometimes playing it too safe is the riskiest strategy of all - especially when you consider the decades of life (and the twists and turns it brings) that may lie ahead.


Subscriber benefit

The ability to gift paywall-free articles is a subscriber only benefit. See more offers by clicking the button below.

Already a subscriber?  Sign in here
Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

Latest from Hawkes Bay Today

Hawkes Bay Today

Taradale scupper Pirates to continue club rugby reign

13 Jul 12:44 AM
Hawkes Bay Today

New Four Square and shops planned for Taradale town centre

12 Jul 06:00 PM
Hawkes Bay Today

‘Still there’: Removal of logging machine sent tumbling over cliff proving tricky

12 Jul 05:59 PM

From early mornings to easy living

sponsored
Advertisement
Advertise with NZME.
Recommended for you
Afternoon quiz: Where was King Philip's War fought?
New Zealand

Afternoon quiz: Where was King Philip's War fought?

13 Jul 03:00 AM
Kaipara Deputy Mayor loses another battle with FENZ in six-year employment dispute
New Zealand

Kaipara Deputy Mayor loses another battle with FENZ in six-year employment dispute

13 Jul 03:00 AM
David Seymour wants a fast-track law for new supermarkets
Politics

David Seymour wants a fast-track law for new supermarkets

13 Jul 02:40 AM
Trump admin in meltdown over Epstein files
World

Trump admin in meltdown over Epstein files

13 Jul 02:18 AM
Peeni Henare selected as Labour's candidate in Tāmaki Makaurau
Politics

Peeni Henare selected as Labour's candidate in Tāmaki Makaurau

13 Jul 02:08 AM

Latest from Hawkes Bay Today

Taradale scupper Pirates to continue club rugby reign

Taradale scupper Pirates to continue club rugby reign

13 Jul 12:44 AM

The Mighty Maroons send 'Red' off in style.

New Four Square and shops planned for Taradale town centre

New Four Square and shops planned for Taradale town centre

12 Jul 06:00 PM
‘Still there’: Removal of logging machine sent tumbling over cliff proving tricky

‘Still there’: Removal of logging machine sent tumbling over cliff proving tricky

12 Jul 05:59 PM
Landslide sparks evacuations, roads closed, homes flooded after storm

Landslide sparks evacuations, roads closed, homes flooded after storm

12 Jul 12:43 AM
Solar bat monitors uncover secrets of Auckland’s night sky
sponsored

Solar bat monitors uncover secrets of Auckland’s night sky

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • Hawke's Bay Today e-edition
  • Manage your print subscription
  • Manage your digital subscription
  • Subscribe to Herald Premium
  • Subscribe to the Hawke's Bay Today
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • Hawke's Bay Today
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • NZME Events
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • © Copyright 2025 NZME Publishing Limited
TOP
search by queryly Advanced Search