Is it time for a retirement reality check?

Are you on course for the retirement you want? ANZ research indicates many New Zealanders may not be.

Our Retirement Expectations survey˜ showed kiwis have high expectations for their retirement - the majority said they were looking forward to living in a holiday home, travelling or buying a new car. But are we setting time aside to plan how we’ll pay for these retirement ambitions? It doesn’t seem so.

Another survey of 1,000 New Zealanders, in conjunction with UMRˆ, found that only 35% have worked out what their retirement savings are likely to be. And for those that have, only 54% of them were confident about the reliability of their estimates.

How much do I need to save?

Most people in the Retirement Expectations survey hoped their KiwiSaver savings would provide more than $300 a week to use on top of their NZ Super (currently about $390 a week°) To achieve this, they would need to have saved around $370,000 by age 65 (based on a 25-year retirement).

It sounds achievable – but how realistic is it?

Are you on track?

Analysis of our members’ current balances and minimum contribution rates reveals that many New Zealanders will fall short of this amount.

Our modelling shows a 30-year-old with $10,000 in their KiwiSaver account today, earning $50,000 and contributing 3% of their salary (matched by their employer), would have saved around $190,000 in their KiwiSaver account by the time they’re 65. A 45-year-old in a similar situation would have only saved $90,000*. That’s some way short of the $370,000 they’d need to achieve their goal.

How much will your KiwiSaver savings provide you per week in retirement?

Retirement reality smaller

What can I do to change my outcome?

As KiwiSaver continues to evolve, there are steps you can take to improve your situation today. Actions like increasing contributions, moving into the right fund to optimise market returns over the long term, and maximising the government’s annual member tax credit can make a big difference (for more information and tips on getting the most from KiwiSaver, explore the ANZ FutureWise website).

Along with this, it’s important to set a plan, adopt good saving habits early and regularly make sure you’re on track.

Use our KiwiSaver account calculator to check if you’re on track to have the retirement lifestyle you want.

Check out our News and Views page for more tips and insights from our experts.

 

 

 

˜ANZ industry research (May 2016). Retirement Expectations survey. ANZ Investments.

ˆANZ online omnibus survey. (August 2017). KiwiSaver Findings Report. UMR Research.

° Work & Income data. Benefit rates as at 1 April 2017 for a single person, living alone. https://www.workandincome.govt.nz/products/benefit-rates/benefit-rates-april-2017.html#null

*Calculations are determined using the ANZ KiwiSaver calculator. Figures are adjusted for inflation. TheKiwiSaver member has a current balance of $10,000, earning $50,000 a year, contributing 3% of their salary, matched by their employer, and a 25-year retirement is assumed. Figures have been rounded as per the assumptions found on the ANZ KiwiSaver account calculator.

 

Published October 2017

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