How can we help Kiwis prepare for a more comfortable retirement?
It’s 2019, and we all know there’s been a lot of discussion in the market when it comes to rising housing prices.
But where do these discussions lead to?
Yes, we know that buying a home in 2019 is much less affordable than it was in 1999 – but of course; a lot has changed since then.
To what end is this change really affecting Kiwis?
With less ease in purchasing properties; experts are now predicting a ‘tough’ retirement for Kiwis – particularly for Gen Y’s and millennials.
Our children and grandchildren may be in the coming of age when it comes to technology, but they’re also in for a struggle when it comes to the cost of living.
The bottom line is: Kiwis who opt out of buying their own home – because the cost is too high – are the ones who are now facing a much less comfortable retirement.
Why? Well usually, those of us who are paying off mortgages, will – optimistically – be mortgage-free by the time we retire. And this will mean more comfortable living.
Planning for retirement means making investments now: no matter how daunting
When we’re young, we have lots of time but little money. When we’re middle-aged we have more money but little time.
So when it comes to preparing for the next stage in life, Kiwis should plan for a retirement where they can enjoy both time and money.
This article will shed some light into the benefits of owning a home, and how to get around the struggles of the housing market.
Although mortgages, deposits and saving may seem daunting; in the long run, investing in a home will result in a simpler, more ‘worry-free’ future.
Market predictions expect that more Kiwis will be renting in their retirement
Did you know that today, 14% of Kiwis are still renting in their retirement? And this is only expected to grow – in fact; predictions expect this to become a whopping 24% by the year 2036.
Something else concerning; a recent study has revealed that many Kiwis are expecting to be able to pay for living costs solely on a pension income during retirement.
Why is this a concern? Well; New Zealand superannuation simply can not cater for this. But that’s another issue.
These numbers are quite surprising aren’t they?
It is quite often the norm for us to start out as renters – we’re fresh out of university or in an entry level job and simply do not have the funds to purchase a property yet.
But somewhere down the line, our initial goal to “save” and purchase a home in the future gets lost along the way – therefore, our “temporary” living arrangement becomes permanent.
Creating a long-term plan in preparation of retirement
Educating young Kiwis
When it comes to preparing for a comfortable retirement, there are a few things that Kiwis need to consider. Basically, saving is the biggest one – and borrowing is of course another.
But something else that is becoming increasingly apparent; is the need to educate young Kiwis.
Why? We need to provide them with the confidence and understanding they need to purchase their own home – and therefore prepare for retirement.
This means, educating them on their options: mortgages, second mortgages, bank loans and non-bank loans.
Purchasing your first home
As is always the case with first-home buyers, there is the weightful worry of figuring out how to get the funds together for a deposit – especially for our younger 20-somethings.
And as we all know; the housing market has reached exorbitant prices – therefore making deposits even more unattainable for young Kiwis.
This is causing our children and grandchildren to feel discouraged, resulting in them getting stuck in their “temporary” renting plan.
Why pay for someone else’s mortgage when you could be paying for your own?
Home-owners set for a simpler retirement
Purchasing a home now means that during retirement you’ll have:
- Free time
- A freehold home
- More discretionary income
You’ll finally be able to settle down and do all those things you didn’t have the money for when you were young or the time for when you were working!