Over the past several years there has been a greater level of discussion around the living wage and that the minimum age.
Both have been trending up over the past few years with the minimum wage set by the government with it increasing from $16.50 up to $17.70 on 1 April 2019 and are due to go up again in April 2020.
Livingwage.org define the living wage as “the income necessary to provide workers and their families with the basic necessities of life. A Living Wage will enable workers to live with dignity and to participate as active citizens in society”.
Currently the living wage is set at $21.15 per hour.
The purpose of this article is not to question whether the minimum wage or living wage is right or wrong but to show that not only does a living wage enable workers to provide a great standard of living for them and their families during their working life, but also provides a much greater opportunity for those workers to provide for themselves in retirement as well.
Using the sorted.org.nz KiwiSaver savings calculator for the following scenarios.
Scenario 1
Age 25, earning the minimum wage ($17.70 per hour) for 40 hours per week, contributing 3% into a growth fund.
Scenario 2
As above except the living wage ($21.15 per hour) instead of the minimum wage.
In the minimum wage scenario the employee would have approximately $476,000 in their KiwiSaver funds at age 65. If the employee was to earn the living wage, at age 65 they would have accumulated approximately $557,000 in KiwiSaver, this would provide an additional $80,000 ito be able to be used throughout retirement.
This certainly shows that by paying a living wage, not only are employers impacting their employee’s lives now but throughout retirement too.
Any information provided is general in nature and not to be considered personalised financial advice. A copy of my disclosure statement is available free upon request.
Please note: figures above are nominal values and use the preset kiwisaver calculators in www.sorted.org.nz
