...............
Printable View
...............
Very helpful and insightful observations
In my case I am 63 and my intention is to work until I am 67. (retire from work but not life) I am fortunate to have good health. At retirement I should have around $250000 in my staff superannuation scheme( National Provident Fund), I then have the option to take the entire amount in cash, or convert it to a monthly pension for life. The final option is to take 25% as cash and covert 75% to a monthly pension. We still have a relatively small mortgage but will be mortgage free in 2 years. Our home has a current market value of $900000. In addition at retirement i will also have a gratuity payment and annual leave payout which should be around $70000. My tentative plan is to invest my National Super at 65 into shares. The decision as to what to do with the NPF staff superannuation of $250000 will obviously be critically important. I have always found shares very interesting and intellectually stimulating and if I could derive an income from my interest would be of great satisfaction, not just financially.
Any observations or comments from my fellow sharetraders would be gratefully received
Couldnt agree more. Always always ALWAYS take the cash, dont give control away to the ticket clippers. If you must let someone else manage it, give it to one of the fund manager's yield funds, e.g. Milford or someone . That way you can withdraw part/all as required and your next of kin get the remnants rather than an insurance company. Whatever NPF pay you per month can be replicated (I would say exceeded given the typical fees) outside their regime and with your control. Also, as hinted at above, these are troubled times for actuarial orgs, I doubt your money is ring fenced so that monthly payment could dissipate if they hit problems.
Thanks for that
I guess if I take the lump sum the two things I would need would be confidence and competence to turn it into a sustained, although modest, regular income.
if i elect the pension option it does have the attraction of a unconditional government guarantee. The downside, I guess, of being risk adverse is reduced income. Its just that the lump sum has taken 30 years to accumulate
You have yourself "well positioned."
Two ideas for you to ponder.
1] Work two extra years until you are 69.[I did this,had 3 incomes,work,pension and dividends ]
2] If you live outside of Auckland ,consider when you are about to retire , a cheaper house.This would free up another $250,000 to $300,000.This would add to the $570,000 making you investment capital $820,000 to $870,000.
If it's guaranteed you'd want to seriously consider that. Also, given you mention the time it's taken to accumulate it, if you put it all in shares and 10% of the capital was gone due to market movements next month, are you able to enjoy yourself as much as you would if you'd taken the guaranteed lower income ?
Given your intention to invest super from age 65 you may want to look at that time at drip feeding all the pension into managed funds using a provider such as Investnow. Fund purchases can be made in $250 lumps. Then maybe look at selling some funds and buying individual shares once there's a reasonable balance. You'd probably want to buy a minimum parcel of $6K in any one share using an online broker for cheap dealing. But there would be little diversification at the start. Or you may decide then that the fund approach is working and just do a periodic withdrawal when you want some money.
I'm retired (due to redundancy) at 58 but should have sufficient savings for my lifestyle. I keep cash for a few years and then use a direct portfolio of NZ shares and bonds, and some bond funds which probably won't perform well for a couple of years. As term deposits mature I drip feed the proceeds into Investnow funds which gives some offshore and broader exposure.
I started with the share portfolio and then started a balanced fund intending to simplify things by just using that (which would probably do just as well). But I kept adding other funds and still have the shares.
You may want to see if you can find a financial advisor who you can pay for a consultation (as a fixed fee one off thing - not the ones who charge a percentage of your funds invested with them).
If you don't have private health insurance make sure you factor in any needs, as well as housing repairs etc.