The financial world is evolving and as we age, we will come across situations we may not be ready for, such as how we access our money, where it’s held and how we can use it such as, the changes to banks and banking processes, cryptocurrency etc.. Some will remain in paid work after retirement age, some will want to pass on an inheritance, some will want and can afford specialised financial advice and others won’t. What we have in common is wanting to spend our later years as financially secure as possible.
As we get older our financial goals may change too, so how we organised things in the past may not work now. Each person’s circumstances, financial situation and the management of their affairs is unique. Some may find that ageing has affected their attention to detail and ability to understand new concepts. If so, then perhaps it’s time to simplify, centralise and make a plan for the future. If you’re familiar and confident with managing your own finances however and the environment in which you do so is relatively stable, then it’s likely that you will want to continue doing this.
This overview gives you the opportunity to consider your future financial planning. It is not personal advice.
Bank branch closures and the phasing out of cheques. Banks have closed many of their branches over recent years. They are also phasing out cheque use without having fully prepared for solutions or alternatives for all their customers. Some banks are committed to some extent to improving services for older people. Westpac for example is rolling out a dementia-friendly service in branches around the country. If these banking changes have disadvantaged, you contact them to find out how they propose to provide for banking services and support for you.
Budget advice and day to day expenses. Many older people struggle to meet rising housing or living costs or have other obligations that make it hard to manage. If you are in contact with a budget advice service, more discretion may be given if you get into hardship.
Donations and bequests. Charitable organisations often rely on donations and bequests and many older people like to assist their favoured charity in such a way. If you plan to leave a large bequest it’s wise to let family/whanau know.
EFTPOS cards Many cards now have a payWave function (the card has a fan symbol on it). This allows you to make purchases up to a set limit by resting your card on the EFTPOS terminal. It makes everyday purchases easy but is easy money if it falls into the wrong hands.
Credit cards. These allow you to borrow money from the issuing financial institution/bank. You have to replay the money with interest. General advice about these cards is to pay back the amount owed at the end of each month. The Sorted website has great advice.
Debit cards. These allow you to draw down your own money to pay for things and to make online purchases. You don’t pay interest as this is your own money.
Equity release or ‘reverse mortgages’. These may free up capital (see the article on this).
Gifting or helping family/whānau out. Be careful about giving financial gifts; you may need the money yourself. Being a loan guarantor for family/whānau members is risky. While a gift seems safer, in the event of a relationship breakdown your family/whānau member could lose half. A loan may offer more safeguards as written terms can spell out repayment expectations. Keep in mind; if you ever need a Residential Care Subsidy your ‘gifting’ will not be overlooked and may impact on your plans later. Get financial advice.
Investments and assets. You may wish to rationalise or review these, especially if your circumstances have changed.
Kiwisaver. Once you reach 65, your employer does not need to contribute to your fund but you can do so. As your circumstances change it’s a good idea to review whether you are comfortable with your fund’s risk level, and whether you wish to withdraw some of it. Careful consideration is needed.
Managing debt. Increasingly, older people are entering retirement with debt, often after helping out other family/whānau members. Debt can quickly escalate so get financial advice.
Monitoring your bank account. Check your statements each month. Watch for spending discrepancies, cashflow and automatic payments. You may find it helpful to ask a trusted family/whānau member or your Enduring Powers of Attorney for Property to do this with you.
In general, make a plan for the future. The New Zealand Society of Actuaries has devised Decumulation ‘Rules of Thumb’ that are useful for those not getting specialist advice. See www.actuaries.org.nz
Centralise information about your financial matters, plan for the unexpected, develop a plan for transferring responsibility if/when required (involving trusted advisors/Enduring Powers of Attorney, partner/spouse/children) and make sure any partner/spouse/children or others who need to know, understand your financial situation.
The Sorted website has a number of tools to help with your financial planning.
Updated: 20 Jul 2023