Kiwis expect to retire later than Aussies
Kiwis expect to retire later than Aussies Mercer finds
Working New Zealanders expect to retire later than their Australian counterparts, a Mercer study comparing preparedness for retirement between the two nations, has found.
Mercer’s KiwiSaver Sentiment Study reveals that while 39 per cent of New Zealanders would prefer to retire before age 60, most (65%) don’t expect to actually cease work until after age 65. Only nine per cent of New Zealanders would like to retire before reaching 50.
Across the Tasman, half (51%) of Australians prefer to retire before age 60, while only 44 per cent expect to cease work when they are over 65. As many as 17 per cent of Australians would like to retire before they reach 50 years of age.
Bernie O’Brien, Head of Mercer New Zealand, said while the comparisons showed there were important differences between the two nations on the issue of retirement expectations and preparedness, it highlights a concerning gap between when New Zealanders would like to retire and the reality of when they are likely to retire.
“The contrast between the two countries, New Zealand and Australia, is interesting, however, the contrast between the two perspectives, preference and expectation, is what we need to focus on.
“Mercer’s study tells us that more Aussies than Kiwis want to retire before age 60, and more Kiwis than Aussies expect to continue working beyond age 65. We think the differences reflect the fact that there’s been an increase in voluntary participation in Australia’s 15 year old retirement system, which provides an achievable model for Kiwis to aspire to,” Mr O’Brien said.
New Zealanders are also more likely than Australians to anticipate relying on government assistance once they retire.
Government assistance, such as the aged pension, is projected to account for 22 per cent of retirement funding for Kiwis, and only 13 per cent for Australians. However, superannuation will account for 43 per cent of retirement funding for Australians compared to just 27 per cent for New Zealanders.
“KiwiSaver has had a strong launch and, if Australian habits are a guide, has enormous potential to transform New Zealand’s retirement landscape. After more than a decade of evolution, superannuation has become central to Australian retirement savings with Government assistance playing a support role.” Mr O’Brien said.
Importantly, Mercer believes there is a relationship in preparedness for retirement, anticipated retirement age and level of comfort in retirement survey measures.
“Given the early groundswell of support for KiwiSaver and the Australian experience, it is reasonable to make some conservative predictions. In the future, as KiwiSaver evolves, New Zealanders will be more confident in their ability to retire earlier and will expect a greater level of comfort in retirement,” he said.
Another key difference in attitudes was that Kiwis were far less likely to turn to their employer for information about retirement planning. Reflecting in Australia the enhanced role of employers in selecting default superannuation funds, 45 per cent of Australians expected their employer to provide information and education to help them prepare for retirement compared with just 4 per cent of New Zealanders expecting the same.
Mr O’Brien said New Zealand employers can expect to take on more responsibility in the future.
“Increasing demand for KiwiSaver information and guidance in the workplace, coupled with proposals for employer co-contributions, which will become a reality in New Zealand in April, means we can expect there to be closer alignment of Kiwi attitudes to that of Australians in the future, and employers will need to be ready to respond,” Mr O’Brien said.
Mercer’s study of 508 working New Zealanders aimed to better understand their sentiment towards KiwiSaver, including their understanding of and attitude towards the scheme, as well as readiness for retirement. In addition to the direct findings, Mercer included a cross country comparison between Australia and New Zealand, drawing from its recent Financial Literacy and Retirement Readiness study undertaken in Australia.