4 risky financial moves to avoid after 50

A lot of personal finance and retirement advice is written for people who are already good with money, but what if you aren’t? Here’s what NOT to do if your financial plan is more ‘set and forget’ rather than ‘strategise and invest’.

By Alex Brooks 

Reaching a certain age, facing a job hurdle or staring down a health scare can prompt us to ponder our finances in a different way.

When we reach one of these financial inflection points, we might start thinking of savvier ways to save or stash money to spend in the future. Few of us think about the reverse - the risky things that can undo even the best laid out financial plans or money goals.

So we bring you four easy risks to manage so you don’t accidentally stuff up your retirement plans. In other words, simply avoid making any of the following 4 errors that will set you back financially. Easy, right? Maybe …

RISKY FINANCE MOVE 1: Not securing your email and personal information

Scams and payment fraud are a bigger risk than most of us realise. If you have an old Yahoo, Outlook or Gmail email address with a simple password that you haven’t changed in years, then you could be in the firing line of a data breach or phishing attempt and put yourself at risk of becoming a target for fraud or scams.

Secure your email! It’s worth making sure you use a passkey or long string of words and numbers as a password - and change your password frequently - to lower your risk of becoming a target.

You can use free online services like Have I Been Pwned or Avast hack check to see if your email has been part of a data breach.

If you’re sick to death of getting those spam SMS messages asking you to pick up a parcel or pay a toll or saying “Mum I dropped my phone”, you can forward the scam SMS to 7726.

There is a new government resource launched in October 2024, called Own your Online, where you can do scam checks and understand how to stay safe. You can also report scams and data breaches at Netsafe. 

RISKY FINANCE MOVE 2: Moving far from friends and family - and needing to move back again

Having a mortgage-free home with low maintenance costs close to good healthcare and social support like friends, family and work is worth its weight in gold once you are retired.

The reality of life in New Zealand is that it’s typically cheaper to live in a provincial location than in one of the big cities.

But before you pack up your slick city apartment for more affordable pastures, make sure to factor in the value of your friends and family that your current location provides. Endless studies have found that our relationships with other people make us happier in retirement than money does.

What’s the point in having more money in your pocket if you’re missing time with grandkids and good friends?

If circumstances force you to move to the country but then spend it to move back again, your retirement finances can be worse off than not moving in the first place.

RISKY FINANCE MOVE 3: Failing to hatch your own personal KiwiSaver nest and invest plan

Ageing today means living 3 decades or more beyond the official age of 65 when you can access NZ Super. Most of us will rely on a mix of NZ Super, KiwiSaver, a mortgage-free home or other investments (see step 4) to support ourselves in retirement.

Those of us who are not finance pros or sitting on massive wealth don’t think much about life after work or how we will earn income in retirement.

The earlier we think about maximising how much we stash into KiwiSaver or commit to invest in long term growth assets like stocks, Exchange Traded Funds or other managed investments that can pay us when we no longer go to work.

Most of us need 3 key financial ingredients to support a decent lifestyle in retirement:

1. Make the most of government support to invest in KiwiSaver
2. Aspire to own a low maintenance and mortgage-free home in retirement
3. Make the most of KiwiSaver and investing

RISKY FINANCE MOVE 4: Failing to plan 

There’s no official retirement age in New Zealand.

Nearly one in 4 New Zealanders over the age of 65 will continue to work, compared to just 12% in Australia and 10% in the UK. This is partly because most people don’t plan how they will create or earn an income stream later in life.

There are 3 big blunders people can make as they march towards their 65th birthday:

1. Failing to apply for NZ Super 12 weeks before the big birthday - this universal payment is open to everyone, even if you still work full-time. All you have to do is check your residency eligibility and apply. If you apply after you turn 65, you will be paid from the date you apply. Make sure to get the SuperGold card, too.
2. Not planning to pay off their own home (see risky move 3)
3. Not planning at all.

There are ways to earn income without going to work everyday, but each requires an element of advanced planning, such as:

Interest: easy money from savings

When you leave money in a savings account or term deposit, the bank pays you interest to keep your balance growing. Historically, interest rates were a bit of a joke (hello, 0.05% in early 2022), but you can check the Reserve Bank of NZ interest rates and see they are higher now.

There’s a catch - some accounts require you to meet conditions like increasing your balance or making regular deposits to get the best rates. And while savings accounts are low-risk, they might not grow your money as fast as the stock market or other investments. The upside? From mid-2025, the New Zealand Government will offer a deposit guarantee of $100,000, so it’s a safer bet for those who want a more secure return.

Getting paid dividends for owning shares

Some companies like to share a piece of their profits with their shareholders in the form of dividends. How much you make from dividends depends on how many shares you hold and whether you choose to cash out or reinvest your dividends for compound growth.

Some experts say you might need a $1 million portfolio at a 5% dividend yield to pull in $50,000 annually. Bottom line: dividend investing can be part of a long-term strategy, but it takes time, patience, and a hefty portfolio to make it work. Remember, the stock market isn’t always a one-way ticket up, and taxes may also eat into your rewards.

Capital growth

Once you’ve stashed money away to save or invest, you want the market value of your asset to rise above what you initially paid - this difference becomes your profit. You can cash out, borrow against it, or just let it keep compounding. How much you make depends on the investments you choose and your risk tolerance.

More volatile assets might offer higher returns, but can you handle the rollercoaster ride? All trading - especially cryptocurrency and contracts for difference trading - runs the risk that your investment doesn’t perform in line with the market. Don’t chase wild returns unless you can afford to lose it all.

After the age of 50, it’s time to zero in on the financial decisions that will really move the needle for your life later on. It’s not always about the optimal financial strategy; it’s about the one you’ll actually stick to.