Over the next three decades, New Zealand is poised to experience an unprecedented transfer of wealth as the baby boomer generation decides how to distribute their hard-earned assets. This generational shift, estimated at around NZ$100 trillion globally, holds the potential to shape the financial landscape for many generations to come.
In this blog post, PMG GM Investor Relationships Matt McHardy explores the dynamics of this wealth transfer in New Zealand and how individuals and families can ensure a secure financial future.
Baby boomers in New Zealand have enjoyed unique advantages in accumulating wealth. High rates of home ownership and a non-means-tested system of superannuation and benefits have provided a solid financial foundation. However, with their retirement approaching, many boomers are now contemplating their legacy.
Custodians of wealth
A majority of older Kiwis view themselves as custodians of their wealth for future generations. This perspective reflects the notion of "Kaitiakitanga," a commitment to preserving and protecting assets.
One effective strategy for securing wealth across generations is investing in assets like managed funds. This approach allows boomers to continue enjoying reliable income while safeguarding the capital base.
The transfer of wealth is a multi-dimensional process, and ensuring that future generations understand their roles as custodians is vital. Tools like SquareOne and Sorted.org.nz can help younger generations develop financial literacy, empowering them to manage their wealth responsibly.
Education is key
Research by the Reserve Bank of NZ highlights the importance of financial education in schools, leading to higher savings rates and greater financial literacy among young adults. PMG is actively involved in promoting financial literacy among young Kiwis through its charitable trust.
For those who may not inherit substantial assets, opportunities for wealth-building still exist. DIY investment platforms such as Sharesies, InvestNow, and GoalsGetter provide accessible options for growing wealth. With low entry points, these platforms open the door to investment products and managed funds, making it possible for individuals to start building their financial future from scratch.
Wealth that endures
No matter the starting point, it's essential to take conscious steps to ensure that a lifetime of hard work continues to pay off. Despite the challenges, New Zealanders can support their financial wellbeing and empower future generations to make informed decisions about retirement and their financial futures.
The original version of this article appeared in the Spring 2023 edition of Informed Investor. Download the full article here.
Disclaimer: The information in this blog is of a general nature and was current on 11 September 2023. It is not intended to be regulated financial advice for the purpose of the Financial Markets Conduct Act 2013, and does not take your individual circumstances and financial situation into account. PMG does not provide financial advice. Please seek advice from a licenced financial advice provider before making any investment decisions.
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