Retirement Planning

Suddenly Single – Financial Advice for Women in a Life Transition

It is sobering to think that around 80% of women will die single, compared to only 20% from men.

These statistics reinforce the need for any woman who finds themselves unexpectedly in control of their finances – whether by choice or unhappy circumstances – to have access to unbiased, expert and empathetic financial advice.

In this brief video, Cambridge Partners’ financial adviser, Pip Kean, shares some of the issues faced by women who find themselves suddenly single.

Cashflow Modelling Explained

Many people struggle to actually ‘see’ what they will need to secure the sort of retirement they hope to enjoy. 

In this short video, Cambridge Partner Andrew Nutttall diagrams the six key variables that you need to consider if you want to enjoy a secure retirement.

How to Retire with Less Golf and More Satisfaction

This fascinating article by New York-based author and financial commentator Carl Richards turns the whole concept of retirement on its head and asks some thought-provoking questions which we all need to consider if we are within even ten years of retirement.
Our thanks to Carl  for this article.

Today, I want to talk to you about retirement.  You know, that thing we spend our whole lives working towards… a mythical land of golf, gold watches, and umbrella drinks. Isn’t that exciting?

Here’s a quick history lesson: The idea of retirement dates back to 1881, when Otto Von Bismarck, the chancellor of Germany, cooked it up hoping to defuse the growing Marxist threat to good old fashioned capitalism. Like most things that are almost a century and a half old, the idea of retirement is rather outdated.

For starters, we’re living longer now than ever before. If you reach 65 today, according to the Social Security Administration, you can expect to live around 20 more years. This doesn’t just pose large money questions. It also brings up a certain existential crisis: namely, are we really supposed to believe that golf will keep us emotionally satisfied for the last 20 years of our lives?

…I have worked with precisely zero individuals who went from full-time work to full-time leisure at 65. Instead, what I have seen over and over are people planning creatively for other options later in life. Now, that often involves scaling back a bit, or even changing careers around 55 or 60 and working for another 15-20 years.

In many cases, I’ve seen people:
1- “Retire” from jobs they hated a decade earlier than they thought financially possible;
2- Get a new part-time job in something they found more fulfilling;
3- Use the income from that work to cover their expenses.

Now, these “retirees” can’t keep growing their retirement accounts once they quit. But they also often don’t need to dip into their retirement savings while they remain working part-time. Don’t underestimate the effect of another decade of compound interest at that point in your life.

All that said, the biggest reason to rethink the traditional retirement model is this:

If you realize you aren’t going to retire, then maybe you don’t have to keep working a job that’s slowly driving you insane.

For many people, retirement is the light at the end of a deep, dark tunnel called a career.

What if we flipped that notion on its head, and the end goal wasn’t to stop doing the wrong kind of work, but to start doing the right kind of work instead?

Just imagine how liberating that would feel…

Or maybe that long-awaited retirement party, the gold watch, and an umbrella drink on a beach is worth it after all. And hey, there’s always golf, right?

Top 3 Most Common Challenges for Retirees

Most retiring baby boomers can expect to be “in retirement” for at least 20 or 25 years. Here are the top three challenges that are commonly faced by those entering retirement:

1) Lack of long-term financial resources.
Many people lack the financial resources to finance their dreams of “25 years of fun,” and are postponing planning for retirement in the wake of previous market volatility, rising house prices, job changes and increasing education costs. Often financial advisers hear from clients that they “may have to phase in my retirement because I don’t think that we can afford it yet.” And some people who have retired are realising that, in fact, they can no longer afford to be “retired.” Many have entered their 50s and 60s with mortgages and high debt loads. This trend has been observed over the past ten to fifteen years as increasing numbers move toward their retirement date. Today, New Zealand’s ratio of household debt to income is one of the highest in the developed world (OECD, 2016).

2) Supporting children and parents
Many of today’s pre-retirees face the problem of having children still at home while dealing with ageing parents who also require support. The concept of the “sandwich generation” has become the “club sandwich generation” for some households. In some cases, there are adult children living at home and baby boomers providing care giving for older parents at the same time.

3) Changing workplace environments
The workplace has changed over the past few decades and this will have a significant impact on how retirement is viewed. Not only do we have more women in the workplace, but also there is a significant move toward self-employment, working at an older age and part-time work.

The content from this blogpost is from our book ‘So You Think You Are Ready To Retire’ a self-guide book to prepare you for retirement, you can receive your free electronic version of this book here:

Get your free ebook here

For a made to measure advice around your retirement contact us.

Living Your Values in Retirement

Your retirement is a time when you can truly live your  life in a way that is true to the values that you have. Psychiatrist Abraham Maslow called this state “self-actualization” (Maslow, 1943).

Simply put, retirement gives you the opportunity to become the person you really are, free of the pushes and pulls of daily life. That is not to say that you are immune from demands or obligations, but rather that you have framed your life goals in terms of those deeply held values that define you.

Maslow developed his “needs” pyramid as a way to describe how our needs frame our actions. Some have interpreted the pyramid as a progression through our lives. However, a better way to look at it is to understand that you may have setbacks along the way that will refocus you on lower levels of the pyramid.

For example, a financial setback may drive you all the way back to your safety needs and your preoccupation to protect what you have. Similarly, earlier in life you may have moved to the self-actualization need and had everything below looked after. Suddenly, you lose a spouse and are left with a feeling of loneliness that focuses your attention on your need for social contact.

The lowest level of the needs pyramid that is threatened will probably be your current concern. And that’s the problem with getting older—there will be many things in your life that will move you up and down Maslow’s pyramid.

The top two layers of the values pyramid represent your need for a sense of purpose and achievement.  This is usually a driving force in most people’s working life, but also in your overall life, including retirement. These needs don’t go away, though many retirees feel that retiring from work also means retiring from the need to strive for something.

Values represent your deepest desires, including how you want to relate to others, to your world, to your sense of purpose. In fact, it can be argued that values are the key driver of your sense of personal accomplishment.

When you retire, that doesn’t go away. In fact, if you have decided that your retirement transition is going to be one of self-actualization, these will be the drivers of many of the important retirement achievements and goals that you have!

Next month we will look at the values the will guide your transition into retirement – what is really important, what will shape your legacy and what makes you happy.

If you’d like to check just how much you really do understand about this phase of life, take this quick quiz. You might be surprised at some of the answers!


Visualising the Next Phase of Your Life

We’ve all heard the old saying “If you don’t know where you are going, how will you know when you get there?”   This saying is extremely apt when it comes to thinking about your retirement.

So it might be a good time to ask yourself a few questions to help define your retirement in clearer terms:

  • What does ‘being retired’ mean to you?
  • What would an average week in retirement look like for you five years from now?
  • What challenges do you see along the way?
  • What fears do you have about this next phase of life?
  • What would you like to accomplish for yourself?

Your retirement will be very different from that of your parents.  But it will also be different from that of your friends, colleagues, or the people next door.  You need to define your retirement in your own terms, not what the experts – or your mates – say.

You also need to realise that retirement is a transition, not a destination!  Most retiring baby boomers can expect to be ‘in retirement’ for at least 20 or 25 years – a long time in anyone’s language.

None of us can truly control what those years will be bring, but we can control our attitude to them.  The reality is that true zest for life comes from within and can best be nurtured by looking closely at your attitudes and view of life, in order to discover the parts that may require some change and intentional rethinking.

“I’m at the top of my game – and I don’t feel old!”

Here’s a very interesting interview from retirement commissioner, Diane Maxwell, which screened on TV3 this morning. Well worth a read or watch in its entirety, but here are some of the key points:
– Most ‘retirees’ don’t feel old – ‘they are fit, healthy and active and want to get up in the morning and do something’.
– Most kiwis want to retire when they are aged between 68 and 72 NOT 65
– 63% of people don’t believe they will have enough to retire on when the time comes
Diane Maxwell was reluctant to put a figure on just how much any one person needs for retirement as needs and expectations vary.  But she did suggest that one of the key tools to help was to always have a three month buffer – in other words enough money in the bank to tide you over for three months if you weren’t able to earn money during that time.
This was necessary regardless of age because it helped protect against a downward spiral of additional debt which could happen at any time, and seriously compromise long-term savings plans.
And what was the message she was getting back from those she talked to who had either reached or were close to retirement? “Don’t write me off – I’m at the top of my game, and I don’t feel old!”

Read or watch the full interview here



We need a second life, like the Japanese

In the past retirement was often referred to as the ‘third age’ – following on as it did from our first age which was one of education, and our second which focussed on our work and careers.

This concept no longer fits life today, where we are encouraged to include elements of education, work and leisure at all stages of our lives, and where many will continue to work well into their 60s, 70s and even beyond.

The Japanese have a second life – and so can we!

The Japanese have an interesting concept to describe this phase of life. They call it ‘Second Life’ and it refers more to a state of mind than a workplace or financial issue. The Japanese believe that when a person reaches middle age, he or she becomes a ‘respected elder’ in society. The respected elder has gained a perspective on life that comes from introspection, experience and perspective. (You might like to run that past a son, daughter or grandchild next time they snigger in a less than respectful way at your lack of understanding of modern technology or other current trends!)

The interesting thing about the Japanese concept is that it relates more to who you are rather than what you are going to do, so is an internal concept. This is a healthy way of thinking at any time but especially as retirement – with all its major life changes and adjustments – approaches. Entering Second Life means transitioning one’s mind into this next stage of life. This is the period in your life when your family responsibilities have changed and you can focus on your ‘inner peace’, get closer to your soul, and use your wisdom to benefit younger generations.

This next phase of your life gives you the opportunity to:

  1. Find life’s meaning and tie your life plan more closely to the values and life goals you may have always had but not had time for in the past.
  2. Achieve life balance – retirement can be a fulfilling combination of quality leisure, satisfying work and a pursuit of self-knowledge.
  3. Realise lifelong dreams – this is a time to turn your dreams into goals by creating the strategy needed to make them happen.

Life is for Living

All the technical talk about investment and superannuation and asset allocation overlooks a few key principles for everyone – life is for living and it’s important to strike a balance in all things, including saving versus spending.  Jim Parker from Dimensional – a highly regarded author and business journalist – has shared these great insights about how to manage the tension between enjoying what you have today and putting money aside for the future.

How Much Do You Need?
Feeling more comfortable about saving for retirement often comes down to setting out in practical terms the kind of lifestyle you want. You also need to consider the costs of aged care and inevitable medical bills. Your Cambridge Advisor will be able to sit down and help you work out how much is enough – and the sooner you can do this, the better.

Finding Your Own Balance
Most people are constantly trying to strike a balance between enjoying life now and ensuring they have the resources to enjoy life later. The good news is there is no ideal balance. It depends on your own goals, needs, resources and expectations. But there are ways of thinking through this challenge.
How do you strike the right balance between saving for the future and enjoying life now? Start by accepting there is no such thing as perfect.

The YOLO Principle
Many people live unnecessarily frugal lives in retirement for fear of running down their principal. But isn’t enjoying the money you’ve saved the entire point? Yes, there is a risk of running out of money. Equally, there is a risk that you never enjoy what you have. Tony Isola recommends the ‘YOLO’ Principle (You Only Live Once).
Which is the bigger worry in retirement – running out of money, or failing to enjoy the money you have saved? Only you can answer that question, but having a clear picture of what you have and how long it will last will definitely help you decide.

Important Update re our Retirement Seminars with Barry LaValley

 Our Wednesday evening session is now full, and there are just a few places left in the two Thursday sessions. So to help meet the high demand we have been able to add an additional seminar on Monday 12th March – 4.30pm for a 5pm start. To secure your place on either Monday or Thursday, please email or click here for more information.

Take 3 hours to sort out the rest of your life

If you’re within ten years of retiring, or have recently retired, you’ll know exactly what you’re retiring from – and why. But the big question is, how well do you know what it is you’re retiring to? Taking a few hours to build a much clearer picture of how you are going to spend this next (and potentially very long) stage of your life could well be the difference between enjoying, or just enduring, your retirement.

You are probably already aware that Cambridge Partners have worked with Barry Lavalley – a leading authority on retirement and lifestyle planning – to produce the book ‘So you think you are ready to retire?’.

Now we’re delighted to announce that we are bringing Barry back to Christchurch for a series of unique retirement planning workshops. This enjoyable and information session will help you gain a better understanding of your next phase of life, as we work through a wide range of issues around retirement, including some you may not have even considered!

You will learn:

  • Five things that may surprise and shock you about retirement
  • The formula for retirement happiness, based on solid research
  • The keys to making a successful transition
  • The ‘ideal’ retirement personality for getting the most out of retirement
  • Why money is not the key to a successful retirement
  • How you can retire on considerably less than you think
  • The differing role that money plays as you get older

You will receive a free workbook, plus a copy of the book ‘So You Think You Are Ready To Retire’.

Sessions will be three hours and will be run at the Canterbury Club, 129 Cambridge Terrace, Christchurch, at 5.30pm Wednesday 14th March, and 10am and 3pm Thursday 15th March. Morning session will start with coffee and refreshments, afternoon and evening session will conclude with drinks and nibbles.

UPDATE 5 MARCH – please note the Wednesday evening and Thursday afternoon sessions are now full, and there are limited spaces left at the session on Thursday morning, so in order to meet demand we have added an additional session on Monday – 4.30pm for a 5pm start.

Please rsvp by 6th March to Chloe Wolt –

Due to anticipated high demand we suggested you reply quickly to secure your place at the time most suitable to you. If you have a partner, we strongly recommend both of you attend.

Fulfilling vs. Time-Filling

Time seems to be of the essence when you retire and what you do with that time now becomes a decision what you will do with it. Yet, there is a big difference between “time-filling” activities and “fulfilling” activities.

With 168 hours in a week, 56 hours of that roughly spent sleeping, leaving you 112 hours to fill. Traditionally work would take up about 55 hours only leaving 57 hours to yourself. By taking away this prominent feature in your life you almost double your time for yourself and your own chosen activities. Have you thought carefully about how you will spend your time?

Psychologist Mihály Csíkszentmihályi first wrote about the idea of flow activities when he observed people getting “lost” in their work and in themselves. There are many terms to describe the feeling such as, “in the zone” or “in the moment”. When you are in this there is no room for anxiety, depression or doubt.

Flow occurs when we are able to direct our attention to one activity and one activity only. People often describe the following characteristics:

  • Feeling of control
  • General feeling of well-being
  • Altered sense of time
  • There is merging of action and awareness
  • There is an integration of mind and body
  • Sense of place

It can occur in the most mundane of tasks similar to reading, exercise, mediation, playing music or gardening. It also does not have to be solitary. Group activities can also create flow such as volunteering, hiking, team sports and conversations. All of these activities bring joy and contentment to a person.

It is always important to do fulfilling activities and fill time in the next phase of life by putting yourself in the zone, relieving stress and getting away from it all. That brings the answer to the question of how will you spend your time, back to another question: What brings you joy?

The content from this blogpost is from our book ‘So You Think You Are Ready To Retire’ a self-guide book to prepare you for retirement, it can be purchased here:

Buy it here

For a made to measure advice around your retirement contact us.

Creating Your Own Bucket List

For those that remember the film starring Morgan Freeman and Jack Nicholson “The Bucket List” in 2007, you will be assimilated to the term. However, simply put it is a list of all the things you want to do and a set of goals that you would like to achieve “before you kick the bucket”.

When sitting down to create this it can be hard to go any further than some of the obvious. But, when creating your list it is not just about the goal and the things you write down initially. You may have always wanted to see New York but this is just a representation of the importance of travel that is part of your values. Your values are powerful drivers for your sense of achievement.

So, when setting out to write your ultimate bucket list here are some things to consider:

  • List your values and identify activities that would allow you to engage in the values that you have.
  • Think about sub areas of your life such as health, personal, work, spirituality, family, relationships leisure and community.

When you answer these questions about your values you can then delve into continuing your list beyond those that were written down primarily. All should be taking the SMART goal approach.

Specific: Goals need to be as specific as possible to make them real.

Measurable: Goals need to be able to be quantified.

Achievable: All goals need to be realistic and achievable. Not necessarily straight away but at some point in time.

Realistic: Goals need to be realistic and worthwhile.

Time-bound: Put down a date to make yourself accountable.

The content from this blogpost is from our book ‘So You Think You Are Ready To Retire’ a self-guide book to prepare you for retirement, it can be purchased here: Buy it here

For a made to measure advice around your retirement contact us.





Five Keys to Unlocking Financial Comfort

With the world being fast paced, there are many changes that are occurring constantly that can have us worrying about the future and whether the past has prepared us. One of the biggest changes in your life is retirement. It marks a new phase in your life, as did leaving home or moving into a full-time job for the first time. Having to worry about your financial position simultaneously to the mental challenges that come with retirement can be difficult. For some of us thinking about money and finances can cause a headache at the best of times!

There are five keys to achieving that definition of financial comfort in your retirement transition:

Key One: Education on Financial Matters

Throughout your life you may have made your living through being financially savvy or picked up knowledge from your own mistakes, others mistakes or from the basics you learnt throughout your education, part time jobs or current jobs.

What is most important to remember are the investment options open to you, tax considerations, where interest rates and heading and investment markets. It is not about becoming a financial expert but understanding enough so that the issue of money is less stressful.

Key Two: ‘The Meaning of Money’

We have all grown up with views on the meaning of money and for many it acts as an emotional catalyst. Understanding how you view money and how this links to stress is important is maintaining a sense of comfort.

Key Three: Efficiency

Speaking of efficiency, you know where you spend your money and allocate resources to maximise it.

Key Four: Efficacy

Part of financial comfort comes from the knowledge that you are using your money in a way that moves beyond just looking after the cost of living and normal expenses and moves towards using you money in ways that promote your core values.

Key Five: Equilibrium

All these elements must be balanced and at an equilibrium. “It is not only what money is, but what money does that matters.”

The content from this blogpost is from our book ‘So You Think You Are Ready To Retire’ a self-guide book to prepare you for retirement, it can be purchased here:

Buy it here

For a made to measure advice around your retirement contact us.


The 8 Different Stages to a Happy Retirement

Although many pre-retirees look forward to retirement as one long (well-earned) vacation, in reality there are often six to eight different phases.


The fantasy stage is those last years of work prior to retirement. The concept of a retirement lifestyle is more fiction than fact, but right now you dream about all of the things you want to do in this next phase of life. Dreams of trips to be taken or toys to be bought mark the fantasy stage. This is what most people think of when they think of no work or responsibilities.


The excitement stage is the year prior to retirement. Pre-retirees focus on the retirement date in the same way as we would the start of a holiday or anticipation of a special event. Here you should focus on finalising plans and strategies for the future.


The stress phase is when reality sets in. Now that retirement has started, it’s common for new retirees in the first year to focus on fears and concerns about this new life. Going from a busy and well-structured life to unstructured time is not as easy as it sounds. Often the routine of work is missed and some struggle to find a replacement.


The honeymoon phase kicks in one to three years after retirement. Retirees try to do all of the things that they had dreamt of in the fantasy stage. This is the perpetual long weekend.


The routine stage kicks in around roughly the three-year point. This is after the initial glow wears off, and the fact that retirement is a day-to-day way of living becomes apparent.


The disenchantment phase commonly occurs between four to six years after retirement. However, it can occur any time. Most often, the disenchantment stage is marked by recognition of your mortality. Depression is common and due to health issues or a bereavement, a retiree’s spirit is often challenged.


A reorientation occurs when a successful retiree makes an adjustment to his or her new reality.


The final stage of contentment is reached when the retiree begins to adjust to the new life he or she has created. Those who struggle to accept and adjust to this new way of life are likely to stay in the disenchantment stage.

The content from this blogpost is from our book ‘So You Think You Are Ready To Retire’ a self-guide book to prepare you for retirement, it can be purchased here:

Buy it here

For a made to measure advice around your retirement contact us.

4 Reasons Why Women Need to Be Invested in Their Families’ Financial Situations

Men are often said to have more familiarity with financial matters, but there is more than a 90% chance that at some point the woman will be the sole financial decision-maker in the household.

Why is this the case?

Women live longer. Women born today are expected to outlive men by almost four years (Statistics New Zealand, 2015). This means they need to save more than men because it is likely they will have more years of retirement to fund. Women represent just over half (51.3%) of the total New Zealand population. However, they represent 54.1% of the overall population above the age of 65, and 64.3% of the population above the age of 85 (Statistics New Zealand, 2014). Therefore, many women will need even more help to handle those extra years, given their prospects for greater longevity.

Women tend to be the major caregivers for elder parents. Caregiving and managing parental assets will affect both men and women, but will probably be more relevant for a woman than a man (Department of Labour, 2011).

Women are more likely to live alone in retirement. Issues such as household budgeting, health care, financial planning, legacy issues and investment management will be increasingly taken on by women.

Women will take an active role in family finances in the future. Increasingly, more women control the family finances. Our advice has always been that the woman in the relationship should be prepared to take over family finances at a moment’s notice.

The content from this blogpost is from our book ‘So You Think You Are Ready To Retire’ a self-guide book to prepare you for retirement, it can be purchased here:

Buy it here

 For a made to measure advice around your retirement contact us.


Happy Retirement Does Not Necessarily Mean Happy Finances

When we talk with pre-retirees the majority say that they believe the key to happiness is having enough money to enjoy their lives. But, happiness has nothing to do with aging or money. Studies have continuously shown that our brains are more often programmed to be optimistic than pessimistic as we grow older.

Yet, when we talk with those already retired, they place more importance on good relationships and good health. Money becomes less important with retirees compared to other aspects of their lives, such as nurturing relationships and engaging in fulfilling activities.

Achieving your goals will certainly help you live a happy life. However, happiness itself is not a goal; it is a precondition to living the life that you want.

PERMA is an acronym that describes five conditions said to lead to “authentic happiness at any age.” PERMA should be the values you aspire to achieve a happy retirement. That is:

Positive emotion

This content from this blogpost is from our book ‘So You Think You Are Ready To Retire’ a self-guide book to prepare you for retirement, it can be purchased here:

Buy it here

For a made to measure advice around your retirement contact us.

So You Think You Are Ready To Retire?

Cambridge Partners and world retirement expert launch book ‘So You’re Ready To Retire?’ for New Zealand pre and post retirees.

Barry LaValley is a leading Canadian educator, expert in retirement and author of the book: ‘So you think you are ready to retire?’. After successfully launching his book in North-America (2014) and Australia (2016), Cambridge Partners has co-written a new edition, specifically aimed at New Zealanders.

The book is a self-educate book that prepares pre and post retirees to cope with the psychological and financial aspects of retirement in New Zealand. Based on Cambridge Partners’ and LaValley’s long career and experience they both conclude that for most people retirement does not just have a financial impact, but can involve an unexpected emotional one. ‘So you think you are ready to retire?’, is the result of 30 years of working in the field of retirement, psychology and transition issues faced by pre and post retirees around the world. It includes personal global stories and thought provoking exercises for the reader.

Buy it here

Don’t Make the Trading Gods Laugh

Fighting Illusions

People who attempt to make money from short-term trading in the financial markets can get hooked on particular views of the future. This view often stems from an illusion of control. The alternative approach, says Barry Ritholtz, is to ignore the noise and stick to a long-term plan.

Your greatest strength in investment is not in showing how smart you are, but in admitting how little you know. Read more here:

Can a Couple Retire on $1.2 Million?

Can a couple retire on $1.2 million? You are both aged 60 and have another five years to wait for government super, but you are wondering if it’s possible to retire early?

Scott Rainey of Bradley Nuttall helps Janine Starks to answer that question in this article in The Press. Click to read the full article.

The Battle Between Your Present and Future Selves

At the time of writing this article, our family has a major milestone pending; our youngest children (twin boys) are turning 21. As you can imagine, they have planned quite the event and we have all spent some time sorting through the numerous collections of photos taken over the past 21 years. This has proven to be an interesting exercise, as we have been able to look back and reflect on the experiences and moments that have helped make us who we are today.

The photos have reminded us of many things; how busy we have been, the very happy moments, the times that were not so easy, and those we missed altogether by being too tied up with work.

While we can’t turn back the clock, I have found myself thinking how interesting it would be to relive some of those times; to have another chance to reconnect with those personalities of five, ten and fifteen years ago. Essentially we are the same people, but in many ways we have all changed a great deal.

My reflections have reinforced how quickly the years pass, and how important it is to continue trying to maintain a balance between living for today and preparing for tomorrow.

Our present self is the product of our experiences and past decisions. Although many of our successes may be the result of earlier planning and hard work, the past has gone and we no longer have any influence on it. We can, however, influence our present and our future.

But we humans do not find it easy to visualise ourselves five or ten years from now. As a result of this, the battle between our present and future selves is fought on particularly uneven footing. Typically, living for today takes precedence over securing options and choices for the future. As prominent English Lawyer and Economist, Nassau William Senior wrote in 1836:

“To abstain from the enjoyment which is in our power, or to seek distant rather than immediate results, are among the most painful exertions of the human will”.

Take some time to create a vision of your future self, ten years from now, and answer these questions: Where am I living? What does my balance sheet look like? What debt do I have? In what type of work am I involved? What income do I earn? What is the source of my income? What is my weight? What are my pastimes? Who am I close to? What experiences and opportunities have I provided for myself and those close to me over the last ten years?

Asking these questions may help you identify gaps between your present financial self and your future financial self, but there may also be gaps that we ourselves can’t see. This is why many of us gain benefit from seeking the opinion of an independent person such as a lawyer, accountant, or financial adviser.

I trust this article has given you some things to contemplate. You may find that you are now able to bridge the gaps between your present and future self, so that in ten years’ time you can look back with a sense of fulfilment and contentedness, free from regrets.

Interested readers might also like to view Ted Talks Daniel Goldstein

Andrew Nuttall is an Authorised Financial Adviser at Bradley Nuttall Limited. Readers should be aware that this article is of a general nature and not personal advice.

His Disclosure Statement is available on request and is free of charge.

Are You Ready for Retirement? (part 2) Improving Your Probability

This is the second in a series of ‘Are you ready for retirement?’ articles.

Read article one here.

Gavin and Jenny look at each other before posing the question we know is coming. “What do you mean we have a 25% probability that we can retire now?”

At this point, we have to jump in.

“It’s not that you have a 25% probability of being able to retire.  You have a 100% probability of being able to retire.  That choice is totally yours.  Our job is just to ensure your portfolio will provide you with the retirement you want, and it’s our job to be honest no matter what.  As we run the numbers, it doesn’t add up.  But don’t worry, there’s good news coming…”

“What’s the good news?” Gavin interjects with a smirk.

Let’s just take a step back and review…

Gavin was a successful executive and had worked his way up to the top of his division. With that came increased income and improved lifestyle.  However, stress was the unwelcome companion and now Gavin wanted to walk away, earlier than planned. That’s why they were talking to us.

Gavin and Jenny are both 60 so they are looking at five years of higher withdrawals (taking them to age 65), and then 30 years of lower withdrawals (thanks to government superannuation).  They both feel 95 is a very generous life expectancy – unfortunately, both sets of parents have passed away, none living past age 86.

All the above looks achievable, and indeed it may be.  But we know that the future is uncertain.  So, rather than Gavin and Jenny simply crossing their fingers and hoping for the best, we can look at the probability that a 60% growth and 40% defensive portfolio can produce the planned withdrawals and leave their two children the estate they’re hoping.

And the answer is…it’s unlikely to.  We calculate the probability at approximately 25%, which is far too low – Gavin and Jenny want at least 75% certainty built into their plans.

That can perhaps be summarised as the bad news, but we prefer to call it the honest reality.  Fortunately, there’s a path forward.  You see, as much as Gavin and Jenny want a definite lifestyle and to leave an estate, they also have flexibility.

For example, we ask Gavin and Jenny, “You’d like to leave an estate of $400,000, in today’s dollars, for your children.  Is that set in stone or is there some flexibility there?”

Gavin cuts in, “Yes”.  But Jenny looks less sure.

Gavin, sensing his wife’s uneasiness, says, “Listen honey, we’re leaving them the house. That’s paid for and worth at least $750,000 now, and it may increase in value.”

Jenny responds, “True, but I’d like to leave at least $100,000 in the portfolio for each of them, to tide them over until the property settles.”

Gavin turns to us, “I agree.  But yes, we do have some flexibility with that one.”

It turns out that, when we pose the question properly, they have flexibility on most items.

It was now obvious to everyone in the room that certain factors just meant a lot more to Gavin and Jenny than others.  And in order to do our job properly, we really need to understand that.

“Gavin and Jenny, you’ve done a great job thinking through your flexibility here.  But it’s clear to everyone that some of these items are a higher priority than others.  Let’s talk about your priorities.  Of all the above, what’s the most important factor to making your retirement what you most want it to be?”

First and foremost, they have no more money to put into the portfolio.  This is everything.  There’s no flexibility there.  We rank that number one, for obvious reasons.

For the next highest priority, the tone of Gavin’s voice says it all.  Work is a stress.

He exclaims, “I feel if I work another two years, I’ll live five less.”

Check.  ‘Retire now’ goes next on the list.  And since they can’t save if they’re retired, we put that factor with it.

This wasn’t an easy conversation.  As is often the case, husband and wife have different priorities and have never really discussed them.  However, putting everything on the table, Gavin and Jenny were very accepting about what the other wanted.  We’re told that some of the most honest conversations partners have, occur in our offices.  It’s just about asking the right questions.

And here’s the good news for Gavin and Jenny. “Not only can you retire, but you can retire right now, with high confidence your portfolio can provide for you.”

The look on Gavin’s face says it all, “Thank you!”

Jenny looks at Gavin, genuinely pleased with how happy he is, “But how?”

Ah, let’s explain that…in our next article.

Note: Gavin and Jenny are a fictitious couple but are based on the experiences of many clients we work with.

If you’d like discuss your retirement plans with Bradley Nuttall, please click here to arrange an appointment.

By Ben Brinkerhoff 

Are You Ready for Retirement? (part 3) A Strategy That Works

This is the third in a series of ‘are you ready for retirement?’ articles.

Read article one here and article two here.

“I’m happy, don’t get me wrong, but I’m also a little confused,” Jenny looked at us, still smiling, but with a slightly quizzical expression.

She continued, “You see, when we came in here asking if we were ready for retirement, you asked us some questions, did some math and told us that we had a 25% probability of having it all work out the way we desired.  Then you did some more math and told us we had a 75% probability…”

Now we were smiling.

“So, what happened?  How did you do it?”

“We did it by listening to you tell us what is most important to you; what your highest retirement priorities really are.  And that was to retire now, for the sake of Gavin.  We also listened to you tell us what you were flexible with, such as your estate and the amount you spend each year.”

“Jenny,” we leaned in for extra emphasis, “all we did was guide you to make smart decisions and to prioritise what matters to you the most.  I’ll show you how.”

Let’s recall where we started. Gavin and Jenny laid out their aspirational retirement goals, including retiring right away, leaving the children a large estate from the portfolio, and living on $120,000 per year.

The chart below gives the detail.  The first row shows that, if Gavin and Jenny do nothing and keep their retirement plans unchanged, there is only a 25% probability that the results will turn out as planned or better.


In the remaining rows, we order Gavin and Jenny’s retirement priorities, starting with low priority retirement factors such as estate and portfolio risk, and finishing with their high priority items such as the year of retirement.


Gavin and Jenny were quick to pick up the implications as we looked at the chart, “So basically, retiring now is possible.  It just means making trade-offs on all those other factors.”

“That’s right.  We recommend you think about this and consider the recommended trade-offs carefully.  You don’t need to make a decision today.  In fact, you can come back later and ask us to run other scenarios based on some modifications.  This is an important decision; this is your strategy.  The important message for today is that retirement today is possible, if the recommended trade-offs feel right to you.”

Gavin leaned back, puffed his cheeks out and exhaled.  He turned to Jenny, “This feels good to me, honey.  It’s so nice to know we have some options.”

“Yeah,” Jenny agreed, turning to us, “would you mind if we went home and thought about this a little more?  I mean, it feels right, but it’s a big decision.”

“Absolutely, we think that’s wise.”  Jenny looked a bit relieved. We continued, “It’s important for you to know that, in our experience, the goal posts will move.  What we mean by this is that life’s unexpected circumstances, good or not so good, will likely require you to adapt your financial strategy.  We understand that, and we want you to know we’ll adjust your strategy accordingly.  This could be due to something good, like a child’s wedding, a big vacation, or anything else.”

“Our daughter’s wedding’s already over, thank goodness!”  Gavin exclaimed.  “But if grandkids come along I could see a long trip to the UK for a visit.”

“Exactly,” we interjected, “we can adapt to that circumstance when it happens, and give you options.  Oh, and one more important thing,” we paused for a moment before continuing, “if markets go really well and we were tracking far ahead of plan, we may take some portfolio risk off the table.  It may not be necessary to rely on markets as much to reach our goals, so why take the unnecessary risk? But we’ll talk about it with you before we do anything, because you may have other priorities to consider together.  Likewise, if markets go badly we’re not going to sit on our hands.  We’ll discuss the implications and give you honest and decisive guidance about what you should do to stay on track.  In other words, our strategy will adapt to reality.  If it doesn’t, it’s not really a strategy.”

Gavin gave us a serious look, “I’m glad you’ve said that.  I mean, how can we plan now for the next 33 years?  I have trouble with five year plans at work – our business strategy needs to adapt to new realities each year.”

Nodding, we replied, “We know, and we agree.  It’s important to have a direction but it’s also important that you know we’ll adapt to your changing priorities and plans.  It’s our job to give you financial options and ensure that those options take your long term objectives into account.”

Gavin looks at us both, “That’s really good guys.”

With that, we give them the plan and the materials so they can consider them privately at home.  As they leave our office, they both look much less tense than they did when they walked in.  They now know they have real options and understand the implications of their decisions on the long term future.  That’s a big relief.

The next day, the phone rings.  It’s Gavin, “We had a long discussion and we want to go ahead.  We just had to make sure our lifestyle plans would work and I think we’re both happy with that now.  When can we come back in?  Let’s get started.”  Gavin paused for a moment then said, “Thank you guys, I feel so much more in control now.”

“Thank you, Gavin,” we respond. “Giving you a strategy to put you in control of your financial life is what we feel best about doing.”

Note: Gavin and Jenny are a fictitious couple but are based on the experiences of many clients we work with.

If you’d like discuss your retirement plans with Bradley Nuttall, please click here to arrange an appointment.

By Ben BrinkerhoffHead of Adviser Services

Are You Ready for Retirement? (part 1)

How do you know if you’re ready for retirement? We reveal our process step by step.

Gavin and Jenny looked tired.  They sat down across the table clutching their financial documents.  We poured a cup of tea for everyone and prepared to have an honest and open conversation.

Gavin looked over to Jenny, then on to us, “What I really want to know is, am I able to retire?”

And that’s the important question thousands of New Zealanders are asking themselves each day.  With their permission, we like to rephrase it slightly, “Am I financially independent?”

In other words, “Is work now optional?”

…And If not now, then when and how?

That’s the right question to ask…and an almost impossible question to answer.


Because almost everyone wants (or should want) an answer with three or less letters: “yes” or “no”.

But the most honest and truthful answer any professional could provide is,

“Let me look at what retirement means to you.  You know – your lifestyle and longevity, the estate you’d like to leave your children and so on.  Then I’ll be able to tell you the probability that the results work out as well as you’ve described, if not better.”

The key word there is ‘probability’.  Unfortunately, that’s an 11 letter word!  But it’s an important word because it acknowledges that the future is not certain.  All assets – cash, fixed interest, property and shares – may have greater or lower returns than anticipated.

Some advisers hold out that they can predict the future.  Other advisers embrace that the future is uncertain and we need to plan on that uncertainty so we don’t get caught out.  We’d fall into the latter category.

Further, given that most of us want to plan on a long retirement, say 30 years or more, how can anyone claim for certain what returns will be like 30 years from now?  30 years ago from today it was 1982.  A lot can change in 30 years.

So turning the question, “Am I able to retire”, into a question about probability is the most appropriate and honest way to answer the question.

The reality is simple – if retirement to you means living on $120,000 per year plus government super but an honest conversation with your adviser led you to believe that wasn’t sustainable, you’d probably adjust down your lifestyle.  And doing so would increase the probability of you being able to achieve your retirement goals.

So whatever the probability, we must always understand it’s adaptable to change.

How do we calculate the probability you’re ready for retirement?  We really need the following pieces of information as a minimum:

  1. When do you want to be financially independent?
  2. How long do you want to plan for retirement?
  3. What amount of net spendable cash do you want per year?
  4. How much do you want to leave your heirs and beneficiaries?
  5. How much can you save per year between now and when you aim to be financially independent?
  6. What percentage of growth assets are you are willing to take in your portfolio?
  7. What is the current amount dedicated to becoming financially independent?
  8. What certainty would you like that your goal works out at least as well as you’ve planned on, if not better?

It is the combination of these answers that define for you what “financial independence” really means.  I’ve never met two people with the same answers… ever.  Retirement is very personal and very unique and thus your retirement strategy must be personal as well.

With the answers to these questions we can determine the probability that your retirement will be as good as you’ve described, or even better.  By ”even better,” I simply mean that, as the years go on, you can take larger withdrawals than planned for, leave your heirs a larger estate, etc.

With the answers to these questions we’re well on the way to answering Gavin’s initial request, “What I really want to know is, am I able to retire?”

But the honest truth is…there’s still a lot to do in order to turn the answers into a strategy that will work.

And, when the answer comes back to Gavin and Jenny, “The probability is only about 25% that this will work out as well as you’ve described or better,” what do they do now?

More on this next time…

If you’d like discuss your retirement plans with Bradley Nuttall, please click here to arrange an appointment.

By Ben Brinkerhoff

KiwiSaver Update

KiwiSaver officially commenced in New Zealand on 2 July 2007, which means it will soon be approaching its fifth birthday.

For ‘early adopters’ who were 60-65 years old when they initially established their KiwiSaver accounts, this time-frame has added significance.

Why? It’s because KiwiSaver members become eligible to withdraw their funds when they qualify for NZ Super (currently age 65), as long as they have been a KiwiSaver member for five years.

If you are not sure how long you’ve been a member, the IRD advise that the commencement date of a KiwiSaver account is typically determined by the date on which funds are first deposited.

For the KiwiSaver members who are not able to withdraw their funds in the near future, you should be aware of three further ‘tweaks’ to the KiwiSaver scheme which were announced by the government in the 2011 Budget –

  1. Reduced government tax credit

    The annual government tax credit of up to $1,042.86pa was halved to a maximum of $521.43pa and this change has already been in place since 1 July 2011.What this means is that for the first $1,042.86 of your personal contributions to KiwiSaver each year, the government will now contribute an extra 50 cents per dollar.In the early years of KiwiSaver the government matched your contributions dollar for dollar up to a maximum payment of $1,042.86, but with over 1.9 million New Zealanders now in the scheme, the government could not continue to afford contributions at this level.
  2. A broader tax on employer contributions

    From 1 April 2012, all employer contributions to KiwiSaver accounts are to be taxed at the employee’s marginal tax rate.What this means is that if your employer has been contributing the minimum 2% to your KiwiSaver account, then up until 1 April 2012 these contributions have been tax free. From 1 April 2012 onwards these contributions will be taxed at your marginal tax rate.If your employer contributes 2% to your KiwiSaver account and your marginal tax rate is say 30%, then the after tax contribution from your employer will effectively reduce to just 1.4% of your salary.

    The calculation is as follows –

    2.0% gross employer contribution
    less 30.0% employer superannuation contribution tax
    = 1.4% net employer contribution (after tax).

    Note: If your employer has been making voluntary contributions to your KiwiSaver account above the 2% level, then the contributions above 2% were already incurring employer superannuation contribution tax. The change advised in the 2011 Budget was simply to have the employer superannuation contribution tax apply to the first 2% of employer contributions as well.

  3. Changes to minimum contribution rates

    From 1 April 2013 the minimum contribution will rise from 2% to 3% for all employee members and for all employers.

Although these various changes dilute some of the savings incentives that KiwiSaver first offered on its launch in 2007, it remains a very attractive long term savings vehicle.

For first-time workers joining the scheme today, it is quite conceivable that the combination of compulsory employer contributions and government contributions (via kick-start and annual tax credits), will exceed the total combinations you make directly out of your own pay.

In a world where most Western governments are deeply in debt and unhelpful demographic trends are placing increasing pressure on the affordability of universal pension schemes (such as NZ Super), many people, both here and overseas, are probably not putting enough money away for their future years.

While KiwiSaver alone may not be enough to fulfil someone’s complete range of retirement aspirations, it at least provides all working age New Zealanders with an attractive and constructive opportunity to significantly improve their quality of life in retirement.

The Trade-off: Preserving Your Standard of Living or Preserving Your Capital

If we had it our way, all investments would be able to deliver two things simultaneously:

  1. Have very little chance of losing money, even over short time horizons
  2. Increase considerably in value.

If only…

But in reality, successful investing and financial planning require us to balance “the trade-off”.

What’s the trade-off?  On the one hand, we want a good night’s sleep.  This is our desire to have only a low chance of making a loss, even over short time horizons.  On the other hand, we want a nice place to sleep.  This is our desire for our investments to increase considerably in value.

So which is better?

As advisers we’ve learned that neither is really better; there is no optimal solution for all.  There is only an informed decision in which both objectives are balanced against each other.  Ultimately, the correct mix depends on the particular needs and attitudes of the client.

Having a good night’s sleep

If having a good night’s sleep means being exposed to very little risk of loss, then such an investor’s primary objective is to “preserve capital”.  This implies an investment approach that focuses on short term Government Bonds, or even shorter term Government fixed interest and bank deposits.  They’re about the safest securities available these days and there is little to no chance of losing money on them.

However, these securities often don’t keep pace with inflation, after taxes.

Consider for a moment that 1-year New Zealand Government Bonds are currently yielding about 2.6% gross.  After you pay the necessary tax on that amount, let’s say at a marginal rate of 30%, this leaves you with about 1.8% to take home.  According the Reserve Bank’s Inflation Calculator, inflation last year (as measured by the CPI) was 1.8%.

So, while investors heavy in 1-year Government Bonds are more than likely to sleep very well, it is equally clear that they are only standing still in terms of providing for their future.

Having a nice place to sleep

There are other issues to be concerned with apart from a short term chance of loss.  What about a long term chance of a diminished standard of living?  Investors concerned about protecting their standard of living (purchasing power) in the future tend to prefer investments with higher expected returns and higher volatility.  Unfortunately, these kinds of investments can, and do, experience periods of loss.

Imagine a family doctor, 15 years from retirement, who contributes to his KiwiSaver fund.  The doctor doesn’t need to use his retirement savings right now and he doesn’t even notice it coming out of his pay each month.  Now let’s say that this year, 15 years before he plans to retire, his KiwiSaver account suffers from a bad market and loses 10%.

Does that really have any bearing on the doctor’s life now?  Has his standard of living diminished today?  Not at all.

His KiwiSaver account has 15 more years to grow and it is very likely to make back that loss, and grow besides.  Short term volatility is clearly not the most important issue to this investor.

Investors like the doctor in our example understand that inflation is a slow and silent killer of financial security.  Such investors seek out more volatile investments in order to preserve the purchasing power of their capital into the future.

How low volatility investments really do lose money

Most investors will find that an appropriate portfolio comprises some assets designed to preserve capital and others designed to preserve purchasing power.  The most suitable mix of the two will depend upon their specific needs and attitude towards short term losses.

Lately, those looking to invest, and a few existing clients, have questioned us about the merits of holding risky assets such as shares and property.  Some have queried why they should have risky assets in their portfolios at all.  Our response is consistent: we are trying to protect our clients’ purchasing power.  If we were to react with fear to recent poor returns and turn to a portfolio heavy in low yield investments, we would almost certainly harm our clients’ ability to reach their financial goals.

History shows that low yield investments can lose money for long periods of time when we correctly account for the corrosive work of inflation.  Let’s review the data.

Table 1 contains 111 years of financial data.  We couldn’t get more data if we tried.  It shows that short term New Zealand Government fixed interest (abbreviated to ‘short term fixed interest’ from here on) beat inflation before tax.  Note, though, that after tax this advantage was virtually nil 1.  Over 100 years equities have delivered returns exceeding both short term fixed interest and inflation by a wide margin, even when accounting for taxes 2.

However, investors in equities (another word for shares) must accept the risk of substantial declines – table 2 shows that in the worst period of the entire 111 year sample.  Now hold your hat – New Zealand equity investors lost 64% of their investment between 1987 and 1990, whereas the worst return for short term fixed interest was 1.51% in 1942 (not too bad).

But this is all before inflation.  What happens when we accurately account for inflation?

You see, it’s not good enough to applaud investments that merely make a positive return.  Investment returns need to outpace inflation in order to provide long-term security.

So let’s consider two more important pieces of information:

  1. The after inflation total return for equities and short term fixed interest during their respective worst periods
  2. The after inflation time required to break even from a 100% investment in either short term fixed interest or equities

What about short term fixed interest?  After inflation, an investor in short term fixed interest lost 45% from 1937 – 1982 and, in total, it took an investor 55 years to break even!  This is by no means a phenomenon that is unique to New Zealand.  Investors in Australia, Canada and the US would have found nearly identical results when investing 100% in bills.

So how could an investment like short term fixed interest, that has never had a negative return (remember the worst period return was 1.51%), lose 45% of its purchasing power?

The answer is simple.

The same year that New Zealand short term fixed interest earned 1.51%, domestic inflation was at 4.0% according to the Reserve Bank of New Zealand’s Inflation Calculator.  So even though the nominal return on short term fixed interest was positive, an investor was really going backwards in terms of purchasing power.  This is not even to mention that the 1.51% yield is taxable.

Warren Buffett, in a recent article titled, “Why stocks beat gold and bonds” summed up this issue beautifully:

Investments that are denominated in a given currency include money-market funds, bonds, mortgages, bank deposits and other instruments.  Most of these currency-based investments are thought of as “safe.”  In truth they are among the most dangerous of assets… their risk is huge.

Over the past century these instruments have destroyed the purchasing power of investors in many countries, even as these holders continued to receive timely payments of interest and principal.  This ugly result, moreover, will forever recur.  Governments determine the ultimate value of money, and systemic forces will sometimes cause them to gravitate to policies that produce inflation…

Current (interest) rates… do not come close to offsetting the purchasing-power risk that investors assume.  Right now bonds should come with a warning label 3.

In short, preservation of capital and the preservation of purchasing power are strategies which both have a place in a diversified investment portfolio.

History is clear that an over-allocation to cash, for fear of short-term drops in asset prices, can be an extremely risky strategy and can lead to the destruction of an investor’s purchasing power.  It is the goal of any good adviser to find an appropriate trade-off that will enable you to reach your long-term goals, while not being exposed to unnecessary market ups and downs.  Perhaps it’s with that combination, that some peace of mind can be achieved.

By Ben Brinkerhoff