But they may be investing too much in lower-risk funds that tend to have lower returns.<\/p>\n
Research in 2023 showed that those nearing retirement were much more likely to be in conservative investments \u2013 at 26.43% compared to 17.24% of middle-aged people.<\/p>\n
Retired people were more likely again to be invested conservatively \u2013 at 31.82%.<\/p>\n
Just under 20% of retired people\u2019s funds were invested in growth assets compared to half of that of middle aged people. Retired women had only 16% of their assets in growth funds.<\/p>\n
Rupert Carlyon, founder of Koura KiwiSaver, said he heard about people taking money out of KiwiSaver to put it into term deposits.<\/p>\n
But he said remaining exposed to some growth assets could make a big difference.<\/p>\n
\u201cIf a client had a $300,000 KiwiSaver and kept it in a balanced fund earning 3.5%, they would end up being able to have monthly payments of $1347 through to the age of 95, from 65.<\/p>\n
\u201cIf that same client put it in a defensive fund earning 1.5% then they would only get a monthly income of $1035. So taking a little bit more risk gives the client an extra 30% income. Not bad.\u201d<\/p>\n
He said people should be wary of \u201clifestages\u201d KiwiSaver options, which promise to align investments with a clients\u2019 age but can mean moving entirely to cash at 65.<\/p>\n
\u201cOur job as providers needs to be to educate our members and clients about the benefits of taking a little more risk and then helping them through it when things get volatile.\u201d<\/p>\n
Ana-Marie Lockyer, chief executive of Pie Funds, agreed some people might be \u201cde-risking\u201d too quickly at 65.<\/p>\n
\u201cEspecially if they don\u2019t need to spend their KiwiSaver funds immediately. A more sustainable approach is to think of 65 not as the end of investing, but as the start of a new 20 to 30-year investment horizon.\u201d<\/p>\n
She said people who had too little exposure to growth assets risked running out of money, given many people could expect to live well into their 80s or 90s.<\/p>\n
\u201cLower-risk assets struggle to keep up with inflation and there is a likely opportunity cost missing the compounding effect of growth type assets.\u201d<\/p>\n
She said people could consider having a couple of years\u2019 worth of spending in conservative assets and the rest in growth, gradually de-risking and adjusting according to a person\u2019s goals.<\/p>\n
Generate wealth adviser Stephanie Whittaker said for years the accepted wisdom had been that people at 65 should move to a conservative fund that was lower-risk and more stable.<\/p>\n
\u201cIf you\u2019re not drawing down your KiwiSaver savings all at once – and according to this FMA Report many people aren\u2019t – you could still have 20 to 30 years ahead of you. That\u2019s a long time to stay too conservative, and a potentially a big opportunity cost from not staying with a growth or balanced fund for longer,\u201d she said.<\/p>\n
According to Sorted\u2019s calculator, someone who is 65 and earning $100,000 a year with $85,000 in their KiwiSaver, contributing 3% plus a matching 3% from their employer \u2013 which is not guaranteed past the age of 65 \u2013 would end up with $129,424 at 75 in a conservative fund, including the planned changes to contribution rates.<\/p>\n
If they were in a growth fund, they could have more than $150,000.<\/p>\n
Generate investment specialist Greg Smith said there was a risk-return trade-off for people to consider.<\/p>\n
\u201cTypically with lower risk funds or low risk funds, you have a lower return, and that\u2019s a natural investing trade-off.<\/p>\n
\u201cSo I think this sort of shows that people are attracted or prepared to take on more risk for the prospect of… higher return. It does appear to be that predisposition from what we\u2019re seeing.\u201d<\/p>\n
– RNZ<\/p>\n","protected":false},"excerpt":{"rendered":"But they may be investing too much in lower-risk funds that tend to have lower returns. Research in…\n","protected":false},"author":2,"featured_media":72929,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[177],"tags":[49987,39617,79,49986,6402,4354,13481,18,19,17,13478,234,235,7657,13480,20205],"class_list":{"0":"post-72928","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-49987","9":"tag-almost","10":"tag-business","11":"tag-choice","12":"tag-cost","13":"tag-could","14":"tag-edmunds","15":"tag-eire","16":"tag-ie","17":"tag-ireland","18":"tag-kiwisaver","19":"tag-personal-finance","20":"tag-personalfinance","21":"tag-retirees","22":"tag-susan","23":"tag-that"},"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/72928","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=72928"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/72928\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/72929"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=72928"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=72928"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=72928"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}