Monday, August 15, 2011

TO SAVE OR NOT TO SAVE.

Must be election year. The polies are talking at us again, as opposed to talking past each other.

Kiwisaver and retirement income are in the spotlight again.

When I got hitched in ,I had a few quid in the bank and a 1000 pound whole of life policy.
On the birth of my firstborn the life insurance 'agent', note he wasn't a 'Financial Consultant', led me to increase my whole of life to a level that would buy a house in the city should my wife graduate to widowhood and my child become the child of a solo mum. There was no DPB but swmbo would have become eligible for a widows benefit or pension as it was known then.
Some 30 years later, the paucity of the ability of those two policies to achieve the intended outcome was eroded to a point where swmbo could have barely afforded a cheap section in the budget area of Masterton with the sum insured plus "bonuses'.

That is the enormous problem with the concept of providing for retirement in the eyes of those embarking on their earning phase of life. The freekin Government just can't stay out of it.

  • When I started "saving" the premiums did not incur tax.
  • Inflation was around the basic interest rate or under.
  • Social security was funded by a fixed proportion if income tax.

Then the polies rediscovered the lure of cynical manipulation of the rort. Bidding for votes as opposed to selling a policy for a way forward became the method.

Today the government adjusts the way Kiwi Saver is structured.

WFF makes some 60% of earners dependent on the gummint for income along with those on the WINZ payroll.

A mishmash of "free" services are offered without reference to actual need, cost or who is paying.

The DPB, unemployment benefits, sickness benefits, hardship grants, National Superannuation et al become the planks in a party's manifesto, while policies for growing the cake, rationing services, self reliance and personal responsibility are ignored or buried.

When a 20 something is looking at a TAXED pay check against the real world of consumption based government expenditure that along with decimating the reward his work is producing; and borrowing at a level whose enormity is beyond comprehension; is it any wonder "saving" is the last consideration in financial planning? Particularly when viewed against the clear fact that dear old auntie Agnes in the 'rest home' gets an identical treatment regime whether she is funding it or the Gummint is.

So, instead of introducing a policy mix that rewards the prudent and penalises the profligate, we will continue with the pay everyone and borrow to fund it until we equal or overtake Greece, when just like them, most won't accept the reality of bankruptcy and will take to the streets in protest.

1 comment:

Anonymous said...

When I read about the potential to live to 1000 years old I wondered about this issue. Imagine the stress of something that keeps me awake pondering now lasting several lifetimes. What sort of watch would you get after 500 years service?

My gut feeling is that the wheels will fall off the current fiat monetary system big time soon. Nothing we do now will save us long term as we are ground between two millstones - inflation and taxation.