Time for a Reality Check on Retirement Savings
More than 2 million New Zealanders are saving for their retirement through KiwiSaver but it’s time for many to take a “retirement reality check” on how much money they will really need, according to a new ANZ survey.
The survey of 550 New Zealanders found that most kiwis are planning to live well during their retirement, owning their own home, driving recent model cars and traveling overseas.
The survey found:
• 33% of people planned to take an overseas trip at least once a year when they were retired
• 79% of people expected to use their own car to get around during retirement
• Less than 1% of people planned to sell their home and rent during retirement
• 26% planned house renovations and 41% planned to purchase new home appliances
• 41% had no intention to work beyond the current retirement age of 65.
ANZ General Manager Funds and Insurance Ana-Marie Lockyer said the survey found that 75% of people intended to fund their retirement through KiwiSaver: “It’s great that so many New Zealanders have put their faith in KiwiSaver but it’s important this isn’t blind faith,” said Mrs Lockyer.
“The reality is that it costs a lot of money to cover daily expenses, run a car and maintain a home. For example, it costs about $4,700 a year to run a car and $7000 a year to cover home repairs and maintenance.”
According to ANZ’s Retirement Savings Barometer most New Zealanders (54%) want their savings to generate more than $300 a week on top of national super.
“You’d need to save around $370,000 to allow you to withdraw $300 a week during retirement,” said Mrs Lockyer. (Based on a 25-year retirement) “Many New Zealanders will fall well short of that based on current KiwiSaver balances and contribution rates.”
• A 30-year-old with $10,000 in their KiwiSaver today, earning $50,000 and contributing 3% of their salary, matched by their employer, would have around $190,000 saved by the time they’re 65.*
• A 45-year-old with $10,000 in their KiwiSaver today, earning $50,000 and contributing 3% of their salary, matched by their employer, would have around $90,000 saved by the time they’re 65.*
“While this is sobering information, you can take steps to make sure you save enough for your retirement,” said Mrs Lockyer. “The first step is to take a bit of a reality check on whether you’re contributing enough to meet your goals.”
She encouraged people to click onto ANZ’s KiwiSaver calculator: “In less than five minutes you’ll be able to see how much money you need to save to generate the income you want in retirement and whether you are saving enough to reach that goal.”