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Hubby gone, next to nothing saved - too late to join at 58?
 
Q.           I am 58 years old and recently separated. I have never been much of a saver and I left all the financial decisions to my ex husband as he seemed to know what he was doing. Too late I realised that several bad business decisions on his part have left me with very little. I work full time in an office and have moved in with my sister. I didn’t join KiwiSaver as my ex husband didn’t believe in it. Is it too late to join? I am in good health and plan to keep working till I am at least 65.
 
A.             I sympathise for you in your situation but let’s look on the bright side. You are in good health and are working full time. Not only that, by living with your sister you can share your domestic expenses and you still have seven years to save for your retirement. Whatever you save between now and then will make your retirement more comfortable. 
 
I am writing this column from Cape Town in South Africa. South Africans take a great interest in financial matters and the scarcity of state support in retirement means that individuals need to make their own provision. A series of Ready Set Retire conferences have been taking place here in South Africa and are giving audiences plenty of food for thought. 
 
One speaker tackled this very question – what happens when you discover that you are not as well prepared for retirement as you thought? Anything from illness to business failure to investment losses can jeopardise your retirement plans. 
 
The first step to take is not to panic, as we don’t make good decisions when we are in panic mode. This includes not taking an excessively high risk strategy in the hope of getting a better return. The second step is to save as much as possible by cutting down on expenses and getting out of debt. By moving in with your sister you have made a very positive move in this direction. Sharing a home will enable savings on everything from food to electricity compared with living along. 
 
Some people find budgeting difficult, but once you see your savings growing you find it easier. Work out your budget with a spreadsheet and look for ways to save on everything from essentials like power and food to discretionary spending such as entertainment and gifts. 
 
Despite your ex husband’s dismissive attitude, joining KiwiSaver is really a no-brainer for someone in your situation. You will get $1000 kickstart from the Government, the annual tax credits of up to $521 plus a 3% top up from your employer. All you need to do to join is fill out a KS2 form (available from http://www.ird.govt.nz) and give it to your employer. Initially you will go into a default scheme, and you can then do some research as to what scheme and fund suits you by using the tools on the Sorted Fundfinder website or by talking to a financial advisor. The Sorted website also has great calculators for working out who much you may save over the next 7 years. Someone on an annual salary of say $45,000 saving 3% may have around $24,000 saved  by the time they reach 65. Cranking up the savings to 8% should push this over $40,000 by retirement – a nice nest egg.
 
This is where you need to work your budget carefully, and make sure you also have emergency funds that you can access easily rather than having all your savings locked away in your KiwiSaver account. 
 
The secret of surviving is being able to adapt, and the good news is that, as humans, we are very good at adapting. Anyone facing a financial crisis should talk to someone, form a plan and work out a budget. They will need to be happy with less and develop a positive outlook. Good health and friendships are worth much more than possessions and don’t need to cost you anything. 

Hawkes Bay Today 31 March 2015
 
Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 870 3838 or go to www.peak.net.nz. The information contained in this article is of a general nature and is not personalised. Send your KiwiSaver questions to shelley.hanna@peak.net.nz