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Do you have money questions you'd like answered? Email susan.edmunds@rnz.co.nz
I am probably typical of a growing percentage of women who find themselves unexpectedly single after a long marriage. I have always been the homemaker and secondary income earner, which means that now I am 59, single, my salary level is moderate and I have a limited number of years until retirement age. I am mortgage free and have around $160,000 in my KiwiSaver.
Additionally I have about $250,000 capital in a term deposit at 6.25 percent. My question is should I invest my capital? I know that interest rates are likely to start falling by next year but investing is scary. When my money is in the bank it feels safe. For me it's a large sum of money and I don't want to risk seeing it decrease in value because it is my retirement nest egg. I did go and see an investment firm but I just felt out of my depth - and the figures they were quoting me in writing were less return than a term deposit, although verbally they said they were likely to be higher. They also charge annual fees and brokerage fees for every transaction that they make and it all made me nervous.
This is a tough situation to be in. If I were in your situation, I would probably invest some of the money that you have in term deposits.
But obviously I'm not you, and you would probably really benefit from going to see a financial planner. A financial planner is likely to take an overall view of your financial picture, as opposed to an investment adviser who might be more focused on finding a suitable investment for you.
The financial planner should be able to help you work out whether you need to take more risks, and the most comfortable way for you to do that if you do - you don't want to end up in an investment that makes you uncomfortable because it's more likely that you might panic when markets move and end up losing money.
Dean Anderson, who is the founder of KiwiSaver provider Kernel, said you look to be in a very positive position right now, with no debt and investable assets.
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He said the big question would be what income you are likely to need in retirement, and how much of that will be provided by NZ Super.
"Critically, for many of us, retirement may last 30-plus years. If interest rates fall and all assets are held in cash, there's a risk of running out of future income.
"This is where a financial planner can help. They can sit down with you, work through your needs, and develop a plan that gives you confidence and a higher chance of avoiding those risks. Well-diversified funds can be ideal tools for this. It doesn't have to involve a lot of jargon or buying and selling direct shares."
He said a common approach would be "bucketing". This is where you divide your money into chunks. You might have enough for two to five years of income set aside in low-risk options, maybe term deposits or a cash fund. The money for your medium term needs would go into a balanced fund.
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"Finally, the last bucket would contain investments to support your income needs in the later years of retirement ... Yes, this latter bucket will fluctuate in value, but you can mentally set it aside, knowing you don't need to access it for a while, allowing time to smooth out the ups and downs."
I'm 55 years old with about $125,000 all in a high-risk KiwiSaver account. I contribute about $5000 per year and want to retire at 65. Should I be moving some of my balance to lower-risk accounts?
I think the answer to your question is similar to that of the first, even though you're currently taking quite different approaches.
You may want to move some of your money into less risky investments if you're planning to withdraw it at 65. Standard advice is that if you have three to 10 years until you need money, you might be in a moderate fund.
But are you likely to want to keep some money invested past 65? You could keep that in higher-risk investments for much longer. Your KiwiSaver provider should allow you to split your money across different funds.
Again, this could be a really good time to get some personalised financial advice, though.