Best ways to warm up winter
Posted by Faith, 30 June 2009
Winter is here and the coldest weather has come early.
The snow sports people and resort accommodation providers are very happy. Others are snuggling in at home for some quality time with family and friends, watching DVD’s and hopefully basking in front of a heater or open fire.
In New Zealand we have some beaut fine days in winter. We can wrap up and get out for some fresh air and warming exercise like cycling, walking and strolling.
Yep, fine days in winter are great.
Old age can also be a good thing if we are fine and we keep warm and active.
But, with the NZ government scrapping contributions into the National Superannuation Fund (known as the Cullen Fund), many are wondering if there will be enough in the nation’s coffers to pay for old age pensions in years to come.
Will we be in for a long winter of discontent in later life?
No one really knows that answer? But the population statistics in most Western countries suggest that vast numbers of the baby boomer generation (born 1946 – 1964) will soon retire from the workforce and there will be enormous pressure on pensions around the world.
So, what to do?
Worry? Berate your MP? Stomp your feet? Sure, you can do all of that, but it might not make a difference.
The best strategy is to be the master (or mistress) of your own destiny.
Decide now that, whatever happens with the government’s pension scheme, you are going to have money in your later years to pay at least for a warm home and for some fun activities.
You need to turn up the heat on your savings now, but it doesn’t need to be a furious boil. The gentle simmer of a small amount put aside each and every week could be all that it takes. It is possible that you’ll never miss a tiny, regular payment now, but it could add up to something that will make all the difference between a contented or a miserable old age.
How much will you need to save? That depends on what you intend to do in retirement. However, let’s assume that at the very minimum you want to live in a warm house in winter. At today’s prices and depending on where you live, you could expect to spend around $1000 on energy (electricity, fuel, gas, etc) in winter to keep nice and toasty.
What sort of lump sum will you need at age 65 in order to be able to spend that extra $1000 per year in your retirement (above any superannuation you will receive), and keep doing so for another 25 years (until you are aged 90)?
(For this example, I have used amounts that are in today’s dollars to make it easier to illustrate the points I am making).
You will need to have $23,000 saved at age 65, to be able to spend an extra $1040 per year, every year, to age 90.
So, how do you save? As the old-fashioned (but still relevant) pre-metric saying goes: “it’s a cinch by the inch but hard by the yard.”
For example, saving a small amount like $15 per week for 25 years will add up to over an amazing $26,600. The table below shows the results from saving $10 per week through to $20 per week. If you are a couple, you can double the final total if you each save the same amount. Imagine what sort of heat you could bask in with this sort of sum? A trip to the tropics every winter, perhaps?
A winter warming tip to get you started: The government will give you free money right now to help save for your retirement. While they have stopped contributions into the National Super Fund (the Cullen fund) they have NOT stopped contributions to your personal KiwiSaver fund.
You will receive a $1000 kick-start from the government when you begin your own KiwiSaver fund. As long as you contribute $1040 per year (that’s $20 per week), the government will give you another FREE $1040 per year (known as a member tax credit) which is paid directly into your KiwiSaver account each year until you are aged 65.
So, do the maths. Even if you are in your 50’s now, you should be able accumulate enough in your KiwiSaver fund to pay for (at least) plenty of warmth in winter, providing you start saving for your retirement and/or start your very own KiwiSaver fund now.
If you’re younger than 50, imagine how many more years you will be able to save and how much more free money you’ll get from the government in that time? You’ll be able to build up much more in your KiwiSaver fund to enjoy your winter years.
For those who can’t be bothered thinking about it, I suggest that you just do nothing and stick you head under the duvet. It will be good practice for spending all winter in bed because, without any extra funds, a duvet might be all you have to keep warm in the future.
What is KiwiSaver?
http://www.kiwisaver.govt.nz/benefits/
How to join KiwiSaver
http://www.kiwisaver.govt.nz/being/how-join/
---ends---
Want more out of your life and money? Then buy my book Keeping the Faith - Travel the World. Beware - it is very powerful! It was awarded a top 5-star rating by the on-line financial bookstore Good Returns, along with the warning: "This book changes lives." Click here to buy Keeping the Faith - Travel the World.
Always set goals and work towards them, but never make New Year resolutions. Want to know why? Read more...
Want to know more about how to make better choices about money? Check out Faith’s Fact Sheet.
See previous blogs:
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Can you grow a money tree?
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Money or your life - which has more value?
The seven secret thieves
Five questions to change your life
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Switching lives - what would you choose?
Who can I trust to help grow my money?
How to swim in a sea of money
Life can be unfair
The rule of happiness
No way to live
Anyone can be good with money
Best ways to warm up winter
Who wants to be a millionaire?
The secret of wealth
Keeping your money safe
Having it all
Win an all-expenses-paid trip for two to Europe (Part 3)
Win an all-expenses-paid trip for two to Europe (Part 2)
Win an all-expenses-paid trip for two to Europe (Part 1)
Make a change for good
A recipe for a happy Christmas
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Rage, rage against the dying of the light
Make a wish come true
Buying or Selling a House – Those that care least, usually succeed
When is a good time to buy a house?
Sleepless Nights in a War Zone
Transitions - more life or more of the “same old, same old” boring stuff?