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Prepare Now or Struggle Later: New Zealand's Aging Population Problem · That Home Loan Hub

• 0:10
  SPEAKER_00: Hello and welcome back to that Home Lon Hart.
• 0:12
  SPEAKER_00: Today we're going to talk about something that will scare the bejesus out of you.
• 0:16
  SPEAKER_00: So stay tuned.
• 0:16
  SPEAKER_00: Hello, James.
• 0:17
  SPEAKER_01: Mauriza.
• 0:18
  SPEAKER_00: I love how you're my partner in crime and scaring people.
• 0:20
  SPEAKER_00: Yeah.
• 0:21
  SPEAKER_01: Nothing to do with this, really.
• 0:22
  SPEAKER_00: This is two scary people delivering some sad news for the future.
• 0:26
  SPEAKER_00: So, what have we talked about just before when we thought we were recording and we were not recording, but now we're recording again.
• 0:32
  SPEAKER_01: Yeah, well, for the record, that was a really good conversation.
• 0:34
  SPEAKER_01: I'm just really hoping we can um repeat it.
• 0:37
  SPEAKER_00: All right, let's recreate.
• 0:39
  SPEAKER_00: So we got worried about New Zealanders because you went to that conference and there was a professor giving a speech.
• 0:47
  SPEAKER_01: Yeah, um a massey professor.
• 0:49
  SPEAKER_01: Look, it was really it's something I've been thinking thinking about for a long time.
• 0:52
  SPEAKER_01: And I know I've brought it up here with reverse mortgages, and I can see uh the the the um some of the institutions that provide those reverse mortgages are doing really, really well.
• 1:03
  SPEAKER_01: So much growth in that bus in those businesses.
• 1:06
  SPEAKER_01: But that's due to the aging demographic changes that are going on.
• 1:10
  SPEAKER_01: Um and that you have uh the baby boomer generation are are now going into retirement.
• 1:18
  SPEAKER_01: Uh so what we have and but at the same time we have a lot less children being born.
• 1:26
  SPEAKER_01: Natural uh reproduction, I suppose you'd call it.
• 1:29
  SPEAKER_01: So we actually have a declining rate of a birth rate.
• 1:34
  SPEAKER_01: So more people were dying in New Zealand than uh being born.
• 1:38
  SPEAKER_00: Wow.
• 1:39
  SPEAKER_01: The only reason our but our population continues to grow um at world-leading pace.
• 1:46
  SPEAKER_01: That's because of the net immigration that comes to New Zealand.
• 1:49
  SPEAKER_01: But generally speaking, there's a lot less young New Zealand people compared as a ratio um against uh the retired generation, those over 65.
• 2:01
  SPEAKER_01: Why that's a bit of an issue is because you know, you get governments get their tax from the working class, from working people, and that tax is used to pay for pensions and all that sort of thing of older people.
• 2:13
  SPEAKER_01: If there's gonna be far more older people in the future than younger people, there's gonna be a real uh there's gonna be a real clash in in sometime in the near future.
• 2:25
  SPEAKER_01: Uh what because it can't carry on the way it is.
• 2:29
  SPEAKER_01: Uh my uh the way I think about it is that I don't think government is going to be able to provide me.
• 2:39
  SPEAKER_01: I'm assuming the government is not gonna provide me any income in my retirement.
• 2:43
  SPEAKER_00: Yeah.
• 2:43
  SPEAKER_00: And I think that was the key takeaway from our earlier discussion is that assume nothing.
• 2:48
  SPEAKER_00: Assume you will get nothing when you retire.
• 2:50
  SPEAKER_00: Yeah.
• 2:51
  SPEAKER_00: And um, and if you assume you'll get nothing and you start from that position, you've got to work it out backwards.
• 2:57
  SPEAKER_00: Okay, how much money will I need when I retire coming in?
• 3:01
  SPEAKER_00: Because even if I have a freehold house, I still have expenses to pay, I still have rates and insurances that will be a fixed cost that will continue to go on.
• 3:12
  SPEAKER_00: And if I'm not having as many babies, you know, like for instance, you said earlier in our conversation that uh on average before a woman you would have two kids, and now it's dropped down to 1.5.
• 3:22
  SPEAKER_00: Yeah.
• 3:22
  SPEAKER_00: So, you know, you won't have as many kids to look after you.
• 3:26
  SPEAKER_00: For instance, and as you said, in New Zealand, the culture of kids looking after their parents is not as um high, right?
• 3:33
  SPEAKER_01: We're sort of just waiting for them to, you know, to give you money.
• 3:37
  SPEAKER_00: Yeah, and uh and that's uh and that's the thing, right?
• 3:40
  SPEAKER_00: Like in Asian countries, usually people live together.
• 3:43
  SPEAKER_00: You have multi-generational families living together.
• 3:46
  SPEAKER_00: In New Zealand, um, people live apart.
• 3:49
  SPEAKER_00: You'll have uh grandparents living separately, kids living separately, grandchildren living separately.
• 3:55
  SPEAKER_01: Yeah, I wonder if it'll change.
• 3:57
  SPEAKER_01: Um, but I was really interested to learn at this conference that China doesn't have a pension.
• 4:02
  SPEAKER_00: Whoa.
• 4:03
  SPEAKER_01: I was like shocked, and they've got the the biggest, one of the biggest aging demographics of all.
• 4:09
  SPEAKER_01: So they've got a really interesting situation there as well, um, which will impact uh as I understand it, is impacting how many people are actually allowed to leave China and go and live in other countries because they're so w aware now of their their um decreasing population and how it's going to impact the economy.
• 4:31
  SPEAKER_01: So that'll have impacts on New Zealand.
• 4:33
  SPEAKER_01: Um but yeah, we've really got to here in New Zealand, we've really got to start focusing on, you know, living in the now, having a good time, sure, but having some discipline about what we can use our extra money, a little bit of extra money, you know, getting into a property, paying it off as quick as you can, building up that equity, perhaps getting another property, um, like we were discussing, um, and also building that Kiwi Saver.
• 5:03
  SPEAKER_00: Yeah, because uh in our unrecorded discussion, we talked about how people are doing such a fantastic job building up their Kiwi Saver to use for their first home purchase, right?
• 5:12
  SPEAKER_00: So they'll work really hard, they'll put 10%, 8%, get to a point where they've got 10% deposit for a property.
• 5:19
  SPEAKER_00: So they might have 50k and it 100k and whatever, and and then they start from zero again.
• 5:24
  SPEAKER_00: And this is where it's important not to just leave it at zero and maintain the mortgage repayments plus your Kiwi Saver.
• 5:33
  SPEAKER_00: Even if you go and start again from 3% or 4% and then slowly build yourself up again, um, absolutely that will make a difference by the time you retire because you might still have another 20 to 30 years by the time you can use your Kiwi Saver again.
• 5:46
  SPEAKER_00: So don't just dismiss it as a distant long future.
• 5:50
  SPEAKER_00: I don't want to think about it.
• 5:52
  SPEAKER_00: This is important, and making sure that you also shop around for that Kiwi Saver because different funds charge you different fees and have different outcomes, and the outcomes could be, you know, tragic or amazing, because it could be the difference uh having 200k by the time you retire or 50k.
• 6:09
  SPEAKER_00: So definitely, you know, that's something to think about.
• 6:12
  SPEAKER_00: And then when it comes to our profession, is to, as you just mentioned before, how do you maximize the property you have in building that property portfolio?
• 6:22
  SPEAKER_00: Because in the future, that's where you would be deriving your income from.
• 6:25
  SPEAKER_00: As the rent comes in, that's your income to go and splosh on wine and grandchildren and grandchildren.
• 6:32
  SPEAKER_01: You know what I mean?
• 6:33
  SPEAKER_01: Um, but yeah, that compounding thing is really important.
• 6:36
  SPEAKER_01: It works for you with KiwiSaver.
• 6:39
  SPEAKER_01: So you need to.
• 6:40
  SPEAKER_01: I know I see clients wrestling with this idea.
• 6:42
  SPEAKER_01: They've worked and have built up this really nice KiwiSaver, and then oh, we've got to use it all, we're gonna use it all for a deposit in our house.
• 6:50
  SPEAKER_01: But yeah, they're still quite really young, you know, sometimes early 30s or late 20s, and so plenty of time to get that crank cranking again.
• 7:00
  SPEAKER_01: Um and like we said, you can pay more into your uh into your Kiwi saver.
• 7:07
  SPEAKER_01: I know in Australia they did 10%, and their uh super scheme is world class.
• 7:14
  SPEAKER_01: We're just a little bit behind them because we started about 20 years later.
• 7:18
  SPEAKER_01: But that if we get stuck into it now, you know, um you will you'll get the benefits of it upon retirement.
• 7:25
  SPEAKER_01: And you don't even notice it.
• 7:26
  SPEAKER_01: It comes out of your, you know, it comes out of your salary.
• 7:30
  SPEAKER_01: Um so once it's just a habit.
• 7:33
  SPEAKER_00: Yeah, and next year the employers have to put in more than 3%.
• 7:38
  SPEAKER_00: So it's slowly gonna go up to 4%.
• 7:41
  SPEAKER_00: Um and all those little bits help, you know, and now you can contribute up to 10% as well.
• 7:46
  SPEAKER_00: So if you are smart about your money and you know, making small sacrifices here and there, we're not saying stop living, yeah, but making small sacrifices and actually topping up.
• 7:57
  SPEAKER_00: And you know, the other day I discovered um not promoting a particular bank, but I've got this credit card with this particular bank and it's got um points, right?
• 8:05
  SPEAKER_00: You get points.
• 8:06
  SPEAKER_00: And I discovered if you had a Kiwi Saver with that particular bank, you can actually transfer your points to the Kiwi Saver.
• 8:13
  SPEAKER_00: And I thought, wow, this is really cool.
• 8:14
  SPEAKER_00: So instead of spending it in um in a shop, like I normally would, I would build up the points to a certain point, and then uh I could spend those things in um liming or farmers or whatever, and usually I'll buy technology or something for the kids.
• 8:29
  SPEAKER_00: But the other day I noticed you can actually transfer those dollar amounts to your Kiwi set.
• 8:33
  SPEAKER_00: And even if it's like 50 bucks, 100 bucks, 200 bucks, whatever, it makes a difference.
• 8:37
  SPEAKER_00: That's as you say.
• 8:37
  SPEAKER_00: It's compounding effect.
• 8:39
  SPEAKER_00: So look out for things like this as well, that not necessarily not costing you anything, but you could benefit from it as well.
• 8:46
  SPEAKER_00: Um, and that's why I'm not saying which particularly.
• 8:52
  SPEAKER_00: Awesome.
• 8:53
  SPEAKER_00: Uh well, James, thank you so much.
• 8:54
  SPEAKER_00: Do you have anything else to do?
• 8:56
  SPEAKER_01: I just wanted to quickly add that I do I I am just a quick plug for the 10% in the Kiwi Saver.
• 9:01
  SPEAKER_01: If you can do it, I'm seeing a huge difference between those clients who have four who've been contributing four percent and those contributing ten percent.
• 9:10
  SPEAKER_01: It's quite often, you know, it's clear, it's double.
• 9:13
  SPEAKER_01: You know, it's so if you are able to to contribute that extra, uh, that's really awesome.
• 9:20
  SPEAKER_01: Just do do the best you can without um you know reducing your life lifestyle uh too much.
• 9:29
  SPEAKER_00: Yeah, fantastic.
• 9:30
  SPEAKER_00: Awesome.
• 9:30
  SPEAKER_00: Well, guys, that's a wrap.
• 9:32
  SPEAKER_00: Um, a quick summary.
• 9:34
  SPEAKER_00: Basically, don't be scared to live right now, but do be scared about the future if there is no income for you and start preparing today.
• 9:43
  SPEAKER_00: Because if you prepare today, you won't be as scared when it comes to your retirement and you will have income coming in, and you don't have to rely on um part-time jobs when you're in your 70s and 80s.
• 9:54
  SPEAKER_00: Like actually, people in China they still work, you know.
• 9:58
  SPEAKER_00: Um, so yeah, if you want to know more, do reach out to us because we can sit down with you, we can model it out for you in the future of how much money do you actually need to retire?
• 10:09
  SPEAKER_00: So um, please reach out, would love to help you.
• 10:12
  SPEAKER_00: And until next time.