Merepeka: Retirement cash vexing issue

Putting money aside every week while young can set you up for retirement.

I have friends who, over the years, continued to be anxious about their retirement years. Admittedly they are Auckland-based. Retirement was about 15 years off, but they stressed about it constantly. They wanted to have sufficient savings to continue to live to the same standard as before they retired. I often thought they were missing out on "living in the now" while they fixated on "planning and saving for retirement". Unlike me. I have a very casual approach to retirement. What will be will be.

It's hard to believe that for some years the compulsory age for retirement in New Zealand was 60. Retirees back then would have been busy preoccupied in their gardens, on the golf course, or had all manner of DIY projects lined up. I suspect it was mostly farmers who continued to work the same hours they always had.

Now, with compulsory retirement abandoned in 1999, anyone who is healthy and financially independent might choose to continue to work past 65. There are some people whose health will not allow them to continue to work. They have been hanging out to reach 65, to qualify for national superannuation. To know they don't have to put in eight to 10 hours of paid work every day. We are not all blessed with good health and for these people knowing they can spend a good part of their day taking care of their health and wellness needs must be a godsend.

With good carer support and self-management there should be no reason why retirement under these circumstances shouldn't be long and enjoyable.

But what about the 140,000 New Zealanders aged over 65 who continue to work? For some it will be out of necessity. Maybe they haven't paid off the mortgage, debts have accumulated over the years, or they're helping out family members financially. Having to stay in paid work past 65 might not be what was planned but thousands are doing it. Then there are those who just want to keep working. They are active, alert and enjoy what they do. The work will not always be full time. They may have reduced their working hours to three days a week. If it suits the employer and employee then you have a very workable arrangement.

And I don't want to hear that 140,000 "oldies" are taking the jobs of younger New Zealanders. One thing you have to give older employees, they turn up. Talk to any employer of older people and invariably you'll hear "they want the job and they're always here". It should never be about "them and us". At present in New Zealand we have 70,000 18 to 24-year-olds, not in employment or training of any sort. They would not be suitable for many of the jobs carried out by those over 65. Yet they must be encouraged to get into training or work of some sort. Will they ever have a retirement savings plan? If not they will be entirely dependent on national superannuation when they retire. But we are already being told superannuation, as we know it today, will not stretch too much longer into the future. I was alarmed to hear this week that for a young person signing up for the unemployment benefit at age 18 the expected time on the benefit will be 18 years. Now that's where some focussed government attention should be applied. They need a hand up to get on a rung of the paid employment ladder as soon as possible.

I remember reading once that a young person can start work at McDonald's at 18 and retire 40 years later a millionaire. The only requirement is that each pay day 10 per cent of wages is put into a savings account. With compound interest and continuing the 10 per cent deduction, with the dollar amount increasing with every pay rise, you're home and hosed. You're a millionaire by 60. Apparently this also allows for a modest home to have been purchased and paid off in that time too. Similar to Kiwibank but without the employer's contribution. I won't tell my friends about this example. They could be millionaires many times over, on their combined salaries, had they followed this simple 10 per cent rule.

Retirement will be different for everyone. With good health, supportive family relations, settled finances and engagement in the community, these all go a long way to ensuring "life is added to years". However long that might be.

- Merepeka lives in Rotorua. She writes, speaks and broadcasts to thwart the spread of political correctness.