Money

Money expert Mary Holm reveals how much money you really need in the bank when you retire - and it's not as much as you think

Do we really need to have saved a million dollars by the time we retire? No, says Mary.

By Emma Clifton
When it comes to big, scary, confusing topics, it doesn't really get more intimidating or more personal than money.
Money makes the world go round. Money can't buy happiness. Money doesn't grow on trees. Think about all the close, intimate discussions you'll have with your loved ones – but would you be comfortable discussing how much you've earned, how much you've saved?
Money is still treated as a secret – feared by some, ignored by others, hyped by many. And then, in the middle of all that obfuscation, is Mary Holm – no nonsense, dry-witted and as Kiwi as they come, as New Zealand's most trusted money expert.
For decades, Mary has been cutting through the confusion when it comes to how we view our money, our worth.
As well as being a seminar presenter and the director of the Financial Markets Authority and Financial Services Complaints Ltd, her Q&A column in The New Zealand Herald has made her something of a financial agony aunt, as readers from across the country send in their problems – the one avenue where us famously shy Kiwis get free rein to talk money. "It's a little bit like your sex life, your financial life," Mary laughs as she sits down with The Australian Women's Weekly.
"A few close friends might know – especially if you've got problems in either area – but you tend not to tell too many people."
Mary strips the mystery from money talk and layers her advice with kindness, humour and thoughtfulness. Feedback for her fortnightly interview on Radio New Zealand includes this pearler: "I am thinking of starting a religion in Mary's honour and building statues and singing songs about her."
She's just released her sixth book, titled Rich Enough? A Laid-Back Guide for Every Kiwi, which she describes as a money guide "for people who'd rather be reading novels".
It might please you to know that even Mary, a financial expert, doesn't really read money books either.
At a university event recently – Mary was a guest lecturer at the University of Auckland – a student came up to ask her what money books she had read recently. She said none. He asked, "What, do you think you know it all?" She replied that no, she reads articles and keeps up to date but "that there are far too many good novels for me to read before I die".
She laughs dryly as she retells this story.
"I think he was quite shocked, but that's how I feel. I don't think money is that important – but it's easy for me to say that, because I've got it sorted. Once it's sorted, you can then get on with what really matters in life, which is friends and family."
Money, as Mary is always quick to point out, is not the way to guaranteed happiness.
"It's so important for people to keep in mind that having more and more money is not a good goal. It's not an uplifting goal."

Mary's own experience with money

One of the reasons Mary is so good at what she does is because she's been through a lot of the situations that people write in about.
She was a struggling, full-time student, staring down mountainous international student fees, when she and her husband moved to the United States in the 1970s to do a master's and PhD respectively.
Although she's quick to point out that being a poor student isn't the same as being poor, full stop.
"That's quite a different thing from long-term poverty and not seeing the light at the end of the tunnel," she says.
"But still, I've been a single mother. I got divorced when my son was eight. So I know those pressures, and how suddenly you're a lot worse off, when your house and your assets are instantly halved."
From the age of 12 she knew she wanted to be a journalist, because she loved writing stories. Her financial advice columns have also appeared in The Dominion Post, The Press, Waikato Times and The Gisborne Herald.
When she first started writing her columns, she kept her opinions to herself and her answers remained all about the money.
"I've got a master's degree in finance, but not in psychology. I wanted to say more but would think, 'I've got no right to,' but after a while I realised I've got as much right as anyone else. I've lived in other countries, I've bought and sold houses – some I've done well on, some I've done terribly on."
After the 1980s financial crash, Mary and her then husband lost 30 per cent on their house price moving between Auckland suburbs.
"It hurts for a while, but then you get over it," she says of losing money.
"Just living life – you see what's happened to your friends and family, so in the end I thought I should just start saying, 'Why don't you do this, why don't you do that?'"
Giving people hope, she believes, is key.
"There are always things you can do – it's certainly not hopeless. And a lot of my advice isn't psychology, it is just plain common sense. And also just trying to be a bit encouraging for people if they've been going through a hard time."
Some of the recurring themes for Mary's readers have been KiwiSaver, worrying about money in retirement and women being left financially adrift after a relationship has suddenly ended. That final one, Mary says, is depressingly common.
"I hate hearing that women are just letting their husbands run the money, because they [the husband] can leave, they can die, they can get sick. Even if none of those things happen, even if the husband outlives the wife, she's still handed over a huge part of the power of the whole relationship. If one of you is running the money, it's not just the money – it's the decisions. What you can do in your leisure time, what you can wear, everything. It's so unnecessary because it's not hard.
"If I could sum up my whole mission, it's getting these important messages to people who aren't ever going to do a course on it, or read an academic book about it. That's what fires me up. I want people to realise they can understand the basic messages."
Her latest book is all of those decades' worth of advice and seminars distilled in one place.
"The book really is written for people who don't know much," Mary says.
The book is dedicated to her son Tim and his partner Dom, two 30-somethings who told her that they wanted to know about money but they were scared to pick up a finance book because they were worried the language would be too inaccessible.
"Get rid of these words," was their advice when reading the manuscript, any time they came across a phrase they didn't know.
Rich Enough? isn't going to tell you all the things you're doing wrong; it's going to tell you how to do the right things and then let your money take care of itself.
You shouldn't be obsessing about it, but you shouldn't be frightened of your money either. Which is hard in a world where the daily news delivers yet another fear-driven headline about the housing market, or savings investments, or the money required for retirement.
Do these news stories drive Mary crazy? "Very much so," she laughs.
"People deliberately make things complicated. I used to go along to seminars – something I can't do much any more because my photo's in the paper and someone might recognise me – just to see what they were telling people. And sometimes they were making it seem terribly complicated and people couldn't follow it."
The pervading truths of how to manage your money have remained the same since Mary did her MBA in her 20s.
"The basic rules of learning to diversify your money, and realising that markets will change, so don't react to what the sharemarket or bond markets are doing today because they'll change tomorrow. These sorts of messages are for ever – so understand them and then get on with your life."

Kiwisaver and retirement

A KiwiSaver account is still the easiest way for most Kiwis to diversify their money, Mary says. You'll get a spread of different shares and bonds and won't have to spend your time playing the markets.
"It's a lot of work, to research companies and know which ones are doing well, and you don't need to do any of that. Just get your money into a wide-ranging share fund, and you'll do as well or probably better than your friend who's researching companies and buying and selling constantly."
And have the right amount of risk at play.
"Put the money you're going to be spending in the next few years in low-risk investments, like bank term deposits or perhaps a KiwiSaver cash fund, so that it won't be affected by the ups and downs of the markets. Put the money you're expecting to spend from about three to 10 years away in a middle-level balanced fund. And then for money you expect to spend more than 10 years from now, put it in a share fund and ignore the scares about markets going down, and if they do go down, ignore that as well.
"You've just got to hang about because it goes back up again. Sometimes it takes a few years but it will always recover in the end. And your average returns will be higher. If you decide to stay in a low-risk fund for another 10 or 20 years, you might have half of what you could have if you were in a high-risk fund."
She paraphrases advice from Warren Buffett, the business magnate worth an estimated $US90billion, who suggested people buy their shares, put the certificates in the bottom of a drawer, "then look at it once every five years".
One of the big myths that Mary has no time for is that you need $1million to retire.
"A lot of the people who do say you need that much are actually in the business and they want you to get scared so you save more – perhaps too much. But instead, many people say, 'There's no way I'm going to be able to save a million so I'm not going to do anything. I'm just not going to think about it.'"
In the book, Mary has three rules of thumb to help people work out how much they need to retire, the sums of which are all considerably less terrifying than having a million in the bank.
"If you've got $100,000, then you can spend $100 a week in addition to New Zealand Super," Mary explains.
"About 40 per cent of New Zealanders over 65 live off NZ Super alone. They've done surveys of people in that age group where they asked if they were struggling financially, and hardly any of them were; about five per cent. But, ideally, we want to have more than just Super, so we can travel and go to shows and all of that lovely stuff."
While the introduction of KiwiSaver in 2007 hasn't necessarily been very helpful for those close to retirement age, it is, Mary believes, extremely helpful for the younger generation.
"It can make a big difference to their lives if they change their habits around credit cards and KiwiSaver from when they're 20, 30, 40. But it isn't too late even at 60."
Retirement is a changing concept, Mary says.
"The number of people working beyond 65 is rising fast. Look at people like Winston Peters and Helen Clark – she's not sitting around smelling flowers. If you continue to work beyond 65, for every year you work you're gaining in two ways: you have one more year in which you're saving money, and one less year you've got to fund in retirement."
Mary, who is in her mid-60s, plans on working into her 70s, spending her retirement savings up to when she turns 90 and then, if she needs it, taking on a reverse mortgage.
"A lot of people say that at 85 or 90, they don't really need much more than NZ Super. You don't need big money by the time you get to 85 or 90. I get letters from people at that age saying, 'I wish I'd spent more in my early retirement, I wish I'd travelled more.'"
It comes back to revolving your money around your life rather than your life around your money; understanding it but also using it to bring you joy.
The final part of Mary's book focuses on happiness, and the proof that spending your money on experiences, rather than items, is the winning way to go.
"You look forward to experiences, you go to them, and then there's a huge premium on looking back. When we look back on our lives, we don't tend to remember the things we've bought as much as the experiences we bought. Your favourite concert or play, the best place you've travelled to. Those are the things you remember."

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