Building financial capability with Diane Maxwell
Speaker: Diane Maxwell, New Zealand’s Retirement Commissioner and leader of the Commission for Financial Capability
Host: Ministry of Justice Women’s Network
Venue: In Wellington and 11 locations joined by AVL link
Date: 28 June 2018
Attendance: approx. 40 in Wellington and 30 by AVL
The MOJ Women’s Network event was inspired by ANZ Bank’s research into the gender retirement fund gap. They predict that the gap in men’s and women’s retirement funds that we see today will get bigger.
“We estimate that a 25-year-old woman, on average, is still likely to retire with $141,000, compared to $220,000 for a 25-year-old man – that's significantly less money, particularly when you consider it potentially needs to last longer." That’s 35% less and we need to do something about it!
Diane Maxwell, New Zealand’s Retirement Commissioner and leader of the Commission for Financial Capability has a goal to build the financial capability of New Zealanders of all ages, with an emphasis on low income and vulnerable groups, as well as an increased focus on young people.
Key messages:
- Everyone should be in Kiwi Saver – it’s a no brainer.
- Start planning/saving for your retirement as early as possible: a little money for a long time, will have less impact at the time but at the end it will be a larger sum. We all find money for a latte every day or make-up that is on sale or to buy lunch every day – why not make your lunch instead and put that money into retirement savings.
- New Zealand’s demographics are changing: we are living longer and having less babies so fewer people will be supporting a larger and older population. Affordability? Who pays?
- 20,000 people are interviewed by the Commission annually across New Zealand. Women are:
- more likely to work part time and in low paying jobs
- more likely to be the stay-at-home parent
- more likely to not know the household's income
- worrying more about money than men but do not take the time to make long-term calculations (they caught up in the demands of the day to day activities, making sure they are balancing the books but tell themselves they do not have the time to do the long-term calculations
- more likely to be in a conservative Kiwi Saver scheme
- less likely to have a will
- less likely to borrow/invest money but more likely to have a store/credit card (which charge at much higher interest rates)
- What messages are we giving to the next generation about their financial capability? There is a myth that if they do not have much money, they do not need to be taught how to manage it – this is wrong. A wealthy life is knowing you have everything under control. Diane is trying to get financial capability as part of the curriculum but is getting push back from teachers – needs parents to help push the message.
- The power of positive thought is great but the ’universe’ is not going to provide for your retirement – you need to plan. Know you household income and expenses. Plan long term vs day to day. e.g. 10/20 years.
Questions & Answers:
Question: I’m currently renting, about to turn 30 and have not started saving – what can I do right now?
Answer: You need to understand your income and expenses – this may be by writing down all your expenses (which may take a week or so) so that you know where your money is going. Then you can decide the amount you can start putting way into savings, or that first you need to reduce your spending or get a better paid job.
Question: Are you saying that we should not be in a ‘conservative Kiwi Saver scheme but in a growth scheme?
Answer: No - it depends on your situation. If you are planning to buy your first home using Kiwi Saver in the next five years – a conservative fund is the way to go, however it you are not planning to use the money for 20/30 years then move into a balanced or growth scheme as over time you will ride out the highs and lows, but in the long run you will get a better return.
Question: How much do you need to save?
Answer: This depends your lifestyle and what you plan to do in retirement (i.e. join a bowling club vs taking a 6-month cruise every two years). Start saving now and then you can worry about how much you will need closer to your retirement as you have a better understanding of your situation now and in the future.
For further information about this event or the MOJ women's network contact Vicki Penman.