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AllyRose39•

'Should it be your retirement savings plan?' seems to be a stupid question to me. It'd do better to ask if it should be your 'only' retirement plan, or if it should be just one part of a plan.

Of course neither of those questions are helpful for me because saving for retirement $3.48 a paycheck feels like trying to build a mountain with a teaspoon.

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OutlawofSherwood•

Agreed with part one. For part two, I wandered off and ran numbers for fun.

Assuming you're starting from scratch and are 20 (so 45 years), paid fortnightly and you're getting employer match (so total is about $182 a year, plus $45 government match on your contributions only, or $18.92 a month), and you're in a growth fund:

You'd have around $67,000 at retirement (in today's real dollar value, I'm ignoring inflation). Not enough to live off, you'd be dependent on Super, but enough to ease a few expenses significantly.

If you always and only contributed the current $1042 annual minimum, and get the $521 tax credit, you'd have about $460,000 in retirement. Or $18,400 annually to live off without even drawing down the principle. Which is possible to live on, just about.

Basically, if you can throw in a few extra hundred dollars a year, even if you can't hit the full $951 needed right now, you'll be exponentially better off with each dollar. After that, it stops being so exciting ;)

(I'm on the benefit right now and I put in $40 a fortnight, and I think it's dumb that I have to fund my own reduced reliance on the government in old age, while being handicapped by lack of employer contributions - it's a huge drawback and was a nasty adjustment to get used to, the proposed tax changes will make a staggering amount of difference to low income contributors - but it's the most financially sensible place to put that money right now. One day, I may not be able to afford it at all, but it's better to stop later than start later).

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AllyRose39•

This is actually somewhat encouraging to read, thank you. I'm a little older (27) and my job is school year only, so I'm a bit further behind than that (Simplicity's projection has me at about $35k~ at retirement age). I make somewhere around $2-3k a year, so putting extra money into Kiwisaver is something that I know is the best thing to do for 65-year old me, but me right now needs money for things like having a functional cellphone. I've been trying to get a job that isn't this one for three years with no luck. I've been staring at my student loan balance lately thinking I'm going to die before I start paying it off. My sister is buying a house and planning a wedding, my brother went from hired to manager in a month. And here I am living off my parents and feeling like I'm never going to be able to breathe again.

Sorry, it's been a bad day/week and I'm tired.

Good on you for putting that money into Kiwisaver, that's such a frustrating choice to have to make between you now and you in the future and it's awesome that you're doing the best thing.

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OutlawofSherwood•

Yeah, you definitely aren't in a good position to put a lot in right now, but it won't be the same forever. And if it is, then you'll have free rent into your retirement too ;) (so you only need $75,000 to live off $3K a year, the math scales down as well as up).

Don't stress the student loan. Going from $30,000 to $40,000 a year doubles your student loan payoffs, so if you get a well paid job, it disappears amazingly fast. But if you're under the threshold, then it just stretches out forever but also doesn't affect you. I was paying mine off from my second year at uni (lucked into a good part time job over the threshold) and it barely budged for nearly ten years, then suddenly dropped like a stone at a new job. I cut about ten years off it in only a couple of years, and I was two years off repaying it entirely. Now I'm 50 years off ;) so I just ignore it.

And if you're eligible, chase after WINZ for anything you can get. $3k isn't enough for anyone to live on. And if you feel it's not 'fair', take a look at what you'd spend that money on, most of it will go directly back into the economy, or to helping reduce your dependence on support in future. Right now, your parents are effectively subsidising the government from having to step in and provide support, or ensure better working conditions, or something.

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AllyRose39•

At this point I'd be happy getting to $10,000 a year. Not enough to live on, but enough to make me feel like a functioning human being. And having a student loan is one of those things that despite it not technically affecting me, it hangs over me (largely reminding me that I made this huge financial investment with someone else's money and have got ....$0.58 for every hour I've worked in the last three years to show for it (it's an allowance I get through work for having a bachelors)).

WINZ...WINZ terrifies me. I get caught up in this brain loop of 'what will they expect of me and what if I can't even do that' and I end up just shutting down instead of doing anything about it. My brain is an anxiety-ridden hellscape these days and at least my parents understand that.

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_Embarrassed_MessOP•

Some of the comments on this piece are real corkers.

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