KiwiSaver- Should I file for financial hardship?
What we know today
Over 1,200,000 cases. 69,000 deaths worldwide. 6.6 million Americans unemployed and an estimated 6% hit to the NZ economy in 2020…… we knew something was coming but we didn’t predict this, a virus pandemic with catastrophic consequences. Well actually Bill Gates did, check out his speech in 2015.
Covid-19 has changed the world as we know it. Never have we seen our boarders shut, our country in lockdown and the impact on our economy. Not 87, not the GFC not anything. This card we have been dealt is a real shocker. As I look at my own business, I have been using technology such as Zoom Meetings forever so it is been somewhat business as usual, but to see this digital revolution we are in peaking as people are forced to work from home, forced to embrace technology, and have a big wake up call about what really does matter in life I am under no illusion that we are not through the worse of this yet and there are some wavey times ahead for the markets and our economy. Everyday on the news I see reports of people not sticking to the lock down rules and the potential for an extension from the government as per a “secret” plan B. So where does that leave us? The everyday New Zealander, the business owner, the dad, the sole trader, the mum, the caregiver, or the over 60.
What are my options?
Looking at the figures mentioned earlier it is inevitable that people are going to lose their jobs, business, and maybe even home. Our biggest magazine producer the most recent to go bust, they will not be the last. I have recently been asked on a couple of occasions (not from clients of mine for the record, but maybe they need to be) Should I grab my KiwiSaver out while I can? Or, Is it a good time to cash out my KiwiSaver? The short answer is NO NO NO! not before seeking professional advice anyway. Financial hardship is a lever we can pull and apply for your KiwiSaver to be paid out, but it is strongly recommended you use this as an absolute last resort. The process to do this has deliberately been made long and hard to turn people off. It is easy to get caught up in the emotion of it all and act out of fear of the unknown. The government has given us several other facilities to exhaust first. These can be found at www.covid19.govt.nz.
Risks and Limitations
Your KiwiSaver is a long-term investment fund set up for your retirement. By ‘cashing out’ now means you will crystalize the losses we have seen in the last month and they then become real. Right now, they are just paper losses. This could mean $100,000’s less in retirement for some people. You may be thinking “well this sounds all well and good protecting the future, but what about the now, what if I can’t get through.” I do feel you; we are all in the same boat and we are in this together.
My advice to you is to stay positive, forget about your KiwiSaver if you can- seek advice from a professional for some peace of mind. Remember you KiwiSaver is not a savings account with your money sitting in there ready to call on when you think you might need it, it is tied up in shares- in property- in fixed interests, it is an investment into your future. We as kiwis seem to forget this.
Let’s make a plan
Make a 30 day, 6 month, and 1 year plan. Use the government benefits, defer tax payments, speak to your adviser, if you don’t have one then speak to me. We will go through your situation step by step and work the best solution. We will get through this together.
Lastly, my biggest piece of advice is ‘STAY HOME’ don’t be a doosh and ruin it for us all.