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This article suggests now is the time to reduce debt. Buying now into the Managed Funds area, while their is a dip, makes sense too.
Spills and no-frills in Budget 2023 “Compliments of Life time Retirement Income NZ
The ‘no frills’ 2023 New Zealand Budget held few thrills for seniors amid a cost-of-living crisis.
Focus points
Dubbed ‘The Wellbeing Budget’, it has a strong focus on the young, through childcare and transport subsidies, as well as investment in education initiatives. There is also a chunky allocation to the cyclone recovery and developing long-term resilient infrastructure. Hard to argue these are not worthy recipients of budget dollars.
However, while there was much chatter about a 20% rebate for the highly-niche video game development sector, older kiwis were not mentioned at all. Some might suggest that the Winter Energy Payment and 7.2% bump in NZ Super last month are boon enough for seniors from the public coffers.
Is it enough?
Yet, that is merely adjusting for inflation. And when food prices are rising by 12.5% a year, it is barely even that. In 2020, UN expert on older people Rosa Kornfeld-Matte found many senior New Zealanders did not have enough money to cover life’s basics. She said the pension should always cover “the minimum of existence,” which NZ Super did not. It seems unlikely we have made any progress since then.
The message from the latest budget hasn’t budged. Anyone who wants a dignified, comfortable retirement must be prepared to fend for themselves.
Some positives to focus on
That is not to say retirees will not benefit from some of the government’s additional spending plans. Scrapping the $5 prescription co-payment is great news for a cohort that tend to be heavily reliant on medical services. In a similar vein, we all benefit if further investment in the health sector makes measurable improvements in staff numbers and waitlists.
Some might be less happy about the tax hike for trust income to 39% for the top rate, bringing it in line with personal tax. However, given the 39% does not kick in until your trust earns over $180,000pa, this probably is not going to impact vast numbers of seniors in the ‘squeezed middle’. Meanwhile, with portfolio investment entities (PIE funds) charging a maximum 28% for investment returns, there are attractive alternatives.
Looking to the future
Finance Minister Grant Robertson indicated that most New Zealanders needed inflation to come down. No argument there. And he insisted that the 2023 Wellbeing Budget would do that. On this, the jury’s still out.