KiwiSaver contributions fall short of retirement savings goals

ASB’s general manager wealth and insurance Blair Turnbull says the nationwide KiwiSaver survey suggests that many Kiwis know how much money in total they need to have saved to have the annual income they aspire to once they finish working. 

“However, the reality of what KiwiSavers are putting aside for their retirement means many will fall short of the nest-egg they need. When the time comes many may well have to look at other options to support themselves, such as selling their family home, or even working for longer, if their only source of retirement income is KiwiSaver and Government superannuation.” 

According to the survey, of those respondents that had retirement savings goals, around half aim to retire on $40,000 per annum, with target of around $600,000 accumulated by the end of their working life. Around two thirds of all respondents didn’t know how long they would be in retirement, but of those people that had thought about it, on average they felt it would be for around 25 years.

Turnbull says the average person aged 18 and over among almost 350,000 KiwiSavers in the ASB KiwiSaver Scheme has saved around $50 per week since June 1 last year, increasing their balance by an average $2600 – including employer and Government contributions and the scheme returns. Saving in this way, the same 35-year-old person will accumulate around $70,000 by the time they retire. This would provide supplementary retirement income from KiwiSaver of $75 per week (around $4000 per annum) for 25 years, on top of the $349 per week from NZ Superannuation at current rates (a total of $22,100 per annum).

“It seems that while more Kiwis than ever are saving for their retirement through KiwiSaver, many of them do not yet understand the amount of money they actually need to put aside for the retirement they want,” says Turnbull. “They’ve set great savings goals, but they need to save more to reach them.”

According to the survey, age and gender have significant impact on an investor’s confidence in planning and saving for retirement, and using KiwiSaver. Women are less likely than men to be saving for retirement, less confident in their ability to make decisions regarding savings and investments and more risk averse in their decisions about their savings and investments. 

More than third of all women surveyed were not saving for their retirement.

Age is factor too. Less than half of respondents aged under 30 are saving for retirement. This climbs to two thirds of those aged between 30 and 50 and almost 80 percent of those aged between 50 and 60.

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