Monday, March 12, 2012

What---we have to save 18%

I think I took a double turn this morning when along with most New Zealanders, I heard that we all have to save 18% of our earnings, and that is from the day we start work. This magic figured had been conjured by some financial wizard, who himself looked a bit sheepish when he announced that figure.
The hosts of the show were also pretty dumbfounded, admitting that even they (lets assume that that earn fairly reasonable sums) would find that figure impossible. What does that say for most NZers? A great deal I would think. If they stop to think for too long, I suspect that they (and me) will continue on their merry ways, spending up large.
The sad thing is that at one time we did have a compulsory Superannuation savings scheme, way back in the 70’s.  However the ugly politics of the day, under the infamous (now dead) Robert Muldoon, the Prime Minister and Minister of Finance waltzed into power with the promise of making such compulsion go away, along with any chance of e decent future savings plan for our future  elderly. We have watched our Aussie brother introduce a similar scheme and now they have many billions stashed away to offset the inevitable poverty, they would have faced. But not us--- our heads have been in the ‘political Lula Land’--- you know the one---‘We can’t face tomorrow---- it’s just too much.’
So what have we ended up with? A country that is not prepared to look after it’s elderly! Sure---some have started to save in ‘Kiwi-Saver,’ but for most of us it is too little too late. The gurus have said the magic 18% figure but most of us are just managing 2% with another 2-3% top-up from the government. What does all this mean?
Given that most of us live from week to week, with little left over for savings of any kind, it doesn’t take much thought to come to the conclusion that the 18% is just BS! Perhaps those of us who live outside the main cities, and earn a reasonable amount; perhaps they could put more aside, but for those in Auckland in particular (I’m not forgetting the other cities) ending the week with a surplus is a rapidly diminishing dream. There are other factors which are muddying the waters too.
The creeping casualization of the labour force in NZ (and other countries) is bringing about a completely different set of social expectations. How can anyone save, if there is little in the way of employment certainty? We were warned about this movement many years ago, but then, it was too far away and didn’t affect so many of us. Now, just read the papers and watch the news and you will know what I mean. Don’t get sucked into the employers’ version of ‘reality’ (the ports and freezing works for example). Those men on the picket lines are not just fighting for themselves and families--- watch this space and see the real side of the present government’s agenda.
What are we to do? (See my DIJATC blogs—1-4). Many of us are going to get a real shock, even before the twilight years approach. We will not be able to afford those fabulous ‘weekend deals’ or the overseas trips. We will be lucky if we can even afford a trip to the doctor. All those subsidies we have had on medical visits will slowly disappear. We will be hard put to pay our day-to-day living expenses. It will feel like the NZ of the 1880’s, before the ‘State’ stepped in to guarantee a decent retirement. The fact that so many live longer now, makes the picture even gloomier.
Is there anything we can do? Yes--- make a hard decision now--- stop playing politics and get a general agreement, somewhat like the Aussie one. We can and we must adjust to this savings regime, or we doom our children to a time that we thought was long in the past.  Will the politicians play ball----probably not--- they are more interested in holding the purse-strings for the three year political cycle than looking at the bigger picture----- bloody cowards!