Q&A: Jane Wrightson
After my husband passed 2 years ago, I am now in a sad, but financially fortunate situation. With 25+ years till retirement, any advice on investing lump sums?
My condolences for your loss. You are effectively honouring your husband’s legacy by aiming to invest and grow your lump sum, though, so good on you for looking for advice on the best way to do so. Sorted has some key principles and questions to ask in order to get the best results, as well as some tips on getting personalised investment advice as well.
Why do you think women are described as too cautious with money or not good with money?
It probably has something to do with how many of us are raised – to be agreeable and risk-averse. We’re good at day-to-day budgeting for the family, but not as confident as men when it comes to investing and taking some risk to grow our money long term. There are stories on the Sorted website that go into this in a bit more depth, and some guides aimed at encouraging women to make the most of their money: Sorted: Women and money.
Do you think this type of information should be provided to a younger audience? By providing this information it could allow for them to understand and plan.
We are doing exactly that through our 'Sorted in Schools' programme for secondary students. Ask your kids if they’ve been learning with our resources. If not, ask their teachers why not!
What are the key changes you think New Zealand needs to consider to keep funding Super at 65?
We’re looking hard at the pre-retirement phase to help New Zealanders arrive at retirement in good financial shape – looking at factors such as housing, work and transport. By improving outcomes in these areas, future Governments will be able to save money as the cost of Super rises. Having said that, we’ve studied Treasury projections and believe that Super is affordable at its current settings for at least the next few decades. It’s imperative that any Government reassures younger generations that NZ Super will be there for them. If young people do not believe this safety net will be there, it’s counterintuitive to think they will save more: our research shows that when young folk are despondent, they often start to spend more.
Interest rates are at an all-time low. What therefore is the value in saving when over the long term their real value will actually just reduce?
When you take into account taxes on interest, and inflation, you are effectively rolling backwards if you are simply keeping money in a savings account, especially over longer periods of time. This is pushing many of us into riskier investments such as shares. This may be a good thing; it might not. Much of it depends on how soon you intend to use the money. For the short term, savings accounts will continue to be appropriate, but for the longer term, other investments are better vehicles for outpacing inflation. Start learning about what kind of investment is right for you on Sorted.
What do you see as the greatest opportunities and/or the most realistic, for making the retirement landscape more equitable for women?
We must keep the pressure on to close the gender pay gap so that women can save the same amount as men. It’s those savings, through KiwiSaver or other pension funds that grow over time with investment returns, that make the biggest difference to how well set up women will be at retirement. Part of this is up to women too – we’re all about encouraging women to be proactive in making sure they’re paid right, and continue to contribute to KiwiSaver if they take time out of paid work. There’s more on this on Sorted: Women and retirement
What is your advice for women in relationships where household ingoing and outgoing tend to be shared, to build up financial independence?
Great question. Relationships thrive when there is a measure of autonomy, and that includes financial autonomy. After the shared expenses are defined and you have a plan to cover them, having agency over a certain amount of money each month is a good thing! Women in relationships (and everyone in a relationship for that matter) should always have their own money to manage. You can read more on Sorted about managing money in a relationship.
Where can we go for easy-to-understand information on KiwiSaver and how do we know what the appropriate fund for us is?
The best way to find out how to make the most of KiwiSaver is to come to Sorted. There you’ll see all you need to know about making KiwiSaver decisions, including an active choice of which fund or funds to be in. It all starts with the right type of fund for you, then comparing available funds of that type, based on how much they cost and how they are invested. It doesn’t have to be difficult!
Women who take time out of the workforce to care for children have long periods of not paying into Kiwisaver. How do we tackle this disadvantage?
As little as $20 a week will qualify you for the full annual government contribution of $520, so we encourage women to keep contributing to their KiwiSaver even when they’re not in paid work. It’s a small amount of money but of course it compounds over a long period. They do, however, miss out on the employer contribution, which affects the sum they end up with at 65. This is one area we’ll be looking at in the three yearly Review of Retirement Income Policies next year, in the hope we can come up with some ideas of how to right the imbalance. Sorted has info on how to maximise your KiwiSaver.
How do we try to increase wise financial/spending decisions with our less fiscally responsible partners?
Having 'the money chat' is the best option to get on the same page, but that’s not to say it’s always easy. On Sorted we’ve put together some helpful aids in order to have those important conversations.
What would be the best option for someone who can't even afford the deposit on a house as house prices are too high and 20% deposit is unrealistic?
It’s really tough, yes. But it’s also important to know that there is a range of government programmes to help people into their first homes, including lower-deposit options. I bought my first house by including flatmate income and these kinds of lateral options can be explored. Hopefully one can work for you and you’ll find it’s not entirely out of reach as it seemed. Keep saving!
What advice would you share to younger viewers with 30-40 years ahead of working, to help them prepare for retirement?
Two things in particular. First, start saving and investing as early as you can, even with modest amounts. We all typically underestimate how much we can achieve over the long term – little and long builds a pretty big nest egg. I think I said that this was one of the key mistakes I made in early life by not doing this properly.
Second, work out your retirement number, so you are clear about what you are forecast to achieve. That way you can gauge whether you are already on track for the lifestyle you want, or whether you need to make some adjustments to reach your goals.
Can you recommend a source of advice for people moving a pension to NZ from overseas? Most seems to come from investment firms rather than independent advisors
There are independent advisers who specialise in overseas pensions and retirement planning. Mary Holm has a list of advisers that charge for their time in a fee-for-service model. You can also search the Financial Advice NZ site for advisers who specialise in this area.
What is your advice to break poor spending habits? This is challenging for millennials and Gen Z with Instagram culture.
We all lose control and impulse buy sometimes. Have you ever considered planning for it? That is, make a spending plan (aka a budget) that has a category for all your spontaneous money moves. When you give your budget room to breathe and bring all your spending into your plan, it makes it easier to stay on track. That said, if you’ve got a real addiction and truly are “shopping until you drop” – dropping way too many dollars uncontrollably – make sure to get some help and support straight away.
I heard a horrible stat (Aus) the highest growing rate of homeless is women 65+ - do we know if it's the same in NZ?
We do know that housing costs (rent or mortgage) can affect women disproportionately in retirement if they are single or widowed. We live longer than men, haven’t been able to save as much, and if we’re still working past 65, may be earning less. With the housing market the way it is, it’s not an easy fix, but we’re getting involved in the conversation and raising awareness of the plight of some elderly with regards to housing. This is certainly part of the great housing challenge: the issues aren’t all about first home buyers.
In your opinion, should financial literacy be taught in school, and/or more education on student loans and other expenses for university or similar study?
Our Sorted in Schools programme is now being used in 62% of secondary schools and kura. The catch is, it’s voluntary, so we’re working hard to encourage teachers to pick it up and use it. Ask your kids if they’ve been learning with our resources. If not, ask their teachers why not! For primary-aged children in particular the Banqer app (not run by the CFFC) is fun.
When it comes to university costs and student loans, we’ve also been addressing this through the 'Sorted' website and its social media channels. Check out Money mistakes we make at uni.
Regarding the importance of stable environment, and your willingness to push back on 'knee jerk' ministers: any advice on influencing other senior leaders to do the same?
Keep reminding them of the big picture. They’ll achieve more, with less damage along the way, if they move with care and consideration. The tortoise and the hare is another good allegory – steady as she goes, one foot after the other, often reaches a goal more successfully than making decisions and changes too quickly. Especially in the retirement space! (not necessarily the innovation space, but you get my point.)