The USA Retirement Savings Crisis
Recently, I came across a financial blog about the effect of the Ford F-150 4wd truck on the retirement savings in the USA. The title of blog was ‘Pick-up trucks are a budget buster’. The writer pointed out that this truck had been the best selling vehicle in the USA for the past 40 years. Then the writer went on to compare the purchase and running costs of this $45,000 truck with that of an average $20,000 saloon car.
The difference was substantial. Furthermore, with tongue in cheek, he suggested that this expense was in some ways the reason that retirement savings in America were in a crisis. And apparently (after the first warm glow of driving a car like this) the ‘happiness’ feeling evaporates and you might as well be driving a $20k saloon.
Not only was this an entertaining read, it also held an element of truth. OK it’s simplistic and there are other factors (like safety and getting out of a field at an A&P show) but it gave me something to think about.
The Kiwisaver crisis
This simple analogy could also be applied to the New Zealand retirement savings problem – the Kiwisaver crisis. For us New Zealanders it’s not the Ford F150 but the Toyota Rav4. If Kiwis chose to purchase a cheaper car instead of the more expensive Rav4 and then instead put the equivalent to savings into their Kiwisaver account then this would make a huge difference to their retirement savings.
Furthermore it speaks to all unnecessary luxuries in our lives. Do we need to buy lunch everyday? What about those afternoon coffees? Can we limit them to once a week.
If you want to discuss your personal Kiwisaver crisis then please don’t hesitate to book a free consultation.