In the last post, I talked about my savings. Now for the sore subject: retirement.
For reference, most months I make ~$3,268 (2 paychecks), so I work off of that figure for my budget. My total budgeted expenses total $2,735, or 84% of my take home. Included in that budgeted expense total is the $415 a month (13% of my take home pay) that I save towards my long-term savings goals. I have ~$28K saved to my EF and short-term funds already. I'm interested in what I should do with the extra $530+, or 16%+ of my take home every month, as I've met my 2011 goals already. I'm taking suggestions!
To complete my financial picture, I have to go over my retirement funds. Brace yourself:
US Funds: $11,473 USD
Roth IRA: $4,831
Traditional IRA: $6,642
NZ Funds: $4,884 NZD
Kiwisaver: $4,884 NZD
I KNOW that this is where I have a huge hole in my budget. For a 32 year old, I am far far behind in this regard. Legally, I am not allowed to save anything to my US retirement funds. I do save 2% of my gross income to my Kiwisaver, my NZ retirement funds--this money is taxed upfront. That 2% is matched by my employer. I don't think it is worth it to save any more % in the Kiwisaver, due to the fees that they take out and the funds they offer. Plus, I think I will be taxed on this money AGAIN when I take it out and use it in the US when I retire or when I go back to the US.
As a stopgap, in the last post, I talked about how I'm saving $255 NZD in my 'Future Roth' fund every month as part of my long-term savings goals. With every raise I'll increase that until I can get into a habit of saving $416 per month, or the amount I would be saving each month to my Roth in the US to max that out. I'm not sure what else to do there.
With the 2% gross that I save in the Kiwisaver, I also can add the 13% take-home that I save as long-term savings every month. Roughly, I save about 15% of my take home to long term goals, 16%+ to short-term savings goals, and less than 71% of my take-home to my budgeted expenses. Most months, I spend MUCH LESS than that 71% and the remainder goes to my short-term goals. I don't have any short term goals right now, so that is the whole reason why we are here!
3 comments:
I don't think you'll be taxed on your Kiwisaver accounts when you leave, however I'm pretty sure you won't be able to withdraw the $1000 kickstart or government contributions which is a bummer. But at least you're earning interest on them in the meantime.
With your leftover cashflow, why don't you look at investing directly in shares for retirement? ASB charge 0.3% brokerage, minimum $30, on NZ shares (not sure about Aussie or others). You could put a certain amount into a high interest savings account until you have the desired amount to invest. Or maybe put away for a future home deposit? Even if you don't plan on buying anytime soon, when you eventually do you'll be glad to have head start.
Awesome feedback, thanks for reading all of my drivel and commenting!
Yeah, the kickstart won't be able to be withdrawn, but that's ok. Most likely, I'll leave my kiwisaver to grow for decades and pull money out of that as a last resort because of the complicated tax ridiculousness--I'll probably be living in the US when I retire.
I think the US gov't WILL probably tax me on anything I withdraw from my NZ retirement in 30 years. I'm not sure about that, obviously, but they are super shady about that kind of thing and I'll probably be double-taxed on my Roth IRA growth, too.
The problem is that I don't really like the yield and performance of the Kiwi retirement funds and shares that I am eligible to buy. The admin fees they charge don't make it worth it in the long run, compared to the other funds I own at Vanguard, for example. I guess that is my problem--at what point do you accept that you are not getting the best deal and just go for it anyway, because there are no other options to save for retirement?
I have a house downpayment fund started already--I contribute $80 per month to that (see sidebar). That's like 30 years away, anyway, though. :)
I'm with you on the retirement fund yields - they're pathetic. I wish we had more choice about how to invest it. I read in an article a few months ago that NZ fund managers were amongst the worst rated in the world!
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