How I (might have) Saved $34K This Morning!

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151209_ff_resolutionsI (might have) saved $34K this morning. And as hard as that is to believe, it’s potentially true. In fact the actual total I could and just might save in my retirement fund is $34,734 just by switching my Kiwisaver across from my bank to the new game in town, Simplicity.

And no, I am not being paid to write this. In fact some of the people behind the new Kiwisaver scheme are also not being paid – even the board of directors work pro-bono, donating their time and considerable expertise. And because Simplicity is not-for-profit, there will be no fat cheques made out to shareholders, and you’ll pay just for what it costs and nothing more.

Why switch?

The most compelling reason to switch can be found here on the Simplicity Difference Calculator, which tells you how much you could save by not shelling out top dollar for fees.

The Simplicity team have estimated that, based on an annual salary $47K increasing annually by 1%, and by saving 6% into its scheme for 45 years, the average Kiwi saver could save an additional $65K upon retirement just by paying minimal Kiwisaver fees.

For me the calculation looked like this:

Screenshot 2016-08-01 18.12.22

To put this savings in perspective, the average Kiwi will spend around $36,000 on mobile phone charges throughout their life time. Compare that to what we’re paying in that same time on KiwiSaver fees, which is $55,000

And translate that sum into your future online shopping goals!

I don’t know about you, but I feel like I am bleeding money with my phone bills… and I am paying a shed load more in Kiwisaver fees. What the…?

And where do these fees go, exactly? We’re personally funding bank exec’s expense accounts, flights, tall expensive buildings, plush offices, and probably muffins and finger sandwiches for meetings. I don’t have muffins and finger sandwiches at meetings, so why should they? Currently the total profit for Kiwisaver managers sits at $150 million and is predicted to rise to $1.3 billion by 2030. Meanwhile, this figure will be nil for Simplicity managers.

So for me, the switch to Simplicity was a no brainer.

atm

Regarding the facts, Simplicity is a very lean company run by some of the globe’s leading fund managers and headed by the same people who previously headed up two of New Zealand’s largest Kiwisaver schemes, Tower and Westpac. Plus, Simplicity NZ Ltd is 100% owned by The Simplicity Charitable Trust and the group intends to shell out 15% of it’s annual management fees into charity, which is estimated to total $10 billion annually by 2030. 

Simplicity is the David up against Goliath setting out to change the landscape for all of us hoping to challenge banks and redefine retirement savings in New Zealand. And I’m all for it!!!!

Another extremely compelling reason to switch, aside from the chunk of cash I get at retirement, is delivered in this punchy blog post by one of the Simplicity Directors, Jenene Crossan, also the genius founder of nzgirl. Jenene comes from a place where: “life is a little short and a little bit empty if you don’t make the world a better place”, saying:

Jenene Crossan

Read up on Simplicity here, and discover for yourself what it could mean for you. All you need to switch is your IRD number and either your passport or driver’s license and it takes about two minutes. You can register your interest here.

There is so much more to this story, and I’ll update you when I have made the switch and let you know how I progress. But for now, I want to keep as much of what I save for when I need it most, when I am no longer earning.

I think this is exciting times for us Kiwis earning under $100K and $50K and who can’t afford to buy up a thousand houses and sell them for record profits.

And I personally would LOVE for you to please calculate your potential savings using the Simplicity Difference Calculator and please share below what you’d save. ?

In the meantime, watch Simplicity managing director Sam Stubbs explain a little more about how it all works in a recent interview with John Campbell below.

 

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