New Zealanders at both ends of the age spectrum risk falling short of their retirement savings goals by not paying enough attention to their KiwiSaver, according to research by Westpac NZ.
The nationally representative survey of 1,000 KiwiSaver members found about one in four people aged 18-24 don’t know what type of fund they’re in and a surprising number of older Kiwis had the same problem.
In the 18-24 age group, 9% of members don’t know their KiwiSaver balance, compared to 5% of all KiwiSaver members.
Younger people are also far more likely to be in a default fund, and are less likely to say it’s important to choose the right type of investment fund to be in.
Westpac NZ Customer Experience Hub General Manager Karen Silk says young people have the most to gain by having a sound KiwiSaver strategy, but not enough of them are starting out on the right foot.
“You’re never too young to be asking yourself how much you’ll need to save to use your KiwiSaver funds to buy a first home, or enjoy the retirement you want,” Ms Silk says. “For most people, the answer is more than they think, so it’s important to make a savings plan now and get started.
“The survey results show there’s still a lack of understanding among young people about the importance of KiwiSaver and how it works. We want them to think regularly about their savings goals and appetite for risk, and use online tools and projections to check if they’re on track. If they want specialised advice, they should come and talk to us.”
Equally concerning were some of the responses from older KiwiSaver members. Only 22% of people aged 55-64 say they know how much they need to save for their retirement and are on track to reach their target. Meanwhile, 11% of people aged 65 or over and still in KiwiSaver say they don’t know what fund type they’re in, or what their current contribution rate is.
“Recently all KiwiSaver providers wrote to their members with details of their projected balance at retirement age, based on their current balance and fund type. It’s really important to get Kiwis thinking about what a comfortable retirement will cost them and how they plan to get there”, Ms Silk says.
“The sharemarket volatility caused by COVID-19 has been a wake up call for many, but our advice remains the same: all KiwiSaver members should base their investment decisions on what they’re saving for, their timeframe for needing the money, and their tolerance for risk.”
The survey results also show – consistent with other studies – that women tend to be more conservative investors, change their investment strategy less frequently and are less likely to know how much they need to save for a comfortable retirement.
“It’s even more important for women to think about their retirement considering they live longer on average than men, and tend to have lower KiwiSaver balances and fewer other investments,” Ms Silk says.
However the survey’s findings suggest Kiwis are thinking more about their retirement than they have in the past. For example, 38% of KiwiSaver members say they know how much they need to save for a comfortable retirement; up from just 26% last year. Of people in this group, 55% say they’re on track to reach their target, compared to 41% in 2019.
Survey tables
What is your current KiwiSaver balance?
Gender | Age | ||||||||
Total | Male | Female | 18-24 | 25-34 | 35-44 | 45-54 | 55-64 | 65+ | |
$500-$999 | 3% | 3% | 3% | 10% | 3% | 2% | 1% | 1% | 3% |
$1,000-$4,999 | 14% | 11% | 17% | 30% | 16% | 15% | 6% | 9% | 11% |
$5,000-$9,999 | 12% | 11% | 13% | 18% | 15% | 12% | 8% | 7% | 7% |
$10,000-$19,999 | 17% | 16% | 17% | 12% | 20% | 17% | 15% | 15% | 16% |
$20,000-$49,999 | 24% | 23% | 24% | 4% | 25% | 26% | 32% | 24% | 26% |
$50,000-$99,999 | 12% | 14% | 9% | 4% | 6% | 10% | 17% | 20% | 14% |
$100,000-$199,999 | 4% | 5% | 2% | 1% | 2% | 2% | 3% | 9% | 11% |
$200k or more | 1% | 3% | 0% | 0% | 0% | 2% | 1% | 3% | 5% |
Don’t know | 5% | 5% | 6% | 9% | 3% | 8% | 5% | 7% | 0% |
Prefer not to say | 9% | 9% | 8% | 12% | 10% | 6% | 11% | 6% | 7% |
What is your current contribution rate?
Gender | Age | ||||||||
Total | Male | Female | 18-24 | 25-34 | 35-44 | 45-54 | 55-64 | 65+ | |
3% | 40% | 39% | 42% | 39% | 42% | 48% | 48% | 30% | 15% |
4% | 17% | 16% | 17% | 12% | 17% | 19% | 17% | 18% | 12% |
6% | 6% | 7% | 5% | 9% | 7% | 7% | 5% | 4% | 3% |
8% | 9% | 11% | 8% | 13% | 9% | 9% | 5% | 11% | 7% |
10% | 4% | 5% | 4% | 6% | 4% | 2% | 3% | 9% | 3% |
Nil | 16% | 14% | 17% | 11% | 13% | 10% | 13% | 19% | 49% |
Don’t know | 8% | 8% | 7% | 9% | 7% | 5% | 10% | 8% | 11% |
What type of KiwiSaver fund(s) are you currently in?
Gender | Age | ||||||||
Total | Male | Female | 18-24 | 25-34 | 35-44 | 45-54 | 55-64 | 65+ | |
Defensive | 3% | 5% | 1% | 4% | 5% | 3% | 1% | 2% | 1% |
Conservative | 23% | 20% | 26% | 11% | 22% | 21% | 20% | 28% | 51% |
Balanced | 29% | 32% | 27% | 21% | 25% | 22% | 36% | 44% | 30% |
Growth | 34% | 38% | 30% | 33% | 41% | 43% | 30% | 22% | 18% |
Aggressive | 7% | 9% | 5% | 7% | 7% | 8% | 7% | 5% | 3% |
Default | 4% | 3% | 4% | 14% | 3% | 3% | 2% | 3% | 0% |
Don’t know | 14% | 10% | 17% | 24% | 12% | 14% | 14% | 11% | 11% |
How important is choosing the type of fund to invest in?
Gender | Age | ||||||||
Total | Male | Female | 18-24 | 25-34 | 35-44 | 45-54 | 55-64 | 65+ | |
Extremely | 26% | 28% | 24% | 21% | 29% | 27% | 24% | 26% | 26% |
Very | 31% | 33% | 29% | 25% | 31% | 29% | 30% | 32% | 41% |
Important | 25% | 22% | 28% | 27% | 23% | 27% | 27% | 26% | 16% |
Somewhat | 9% | 8% | 11% | 12% | 9% | 9% | 9% | 8% | 11% |
Not important | 2% | 3% | 2% | 1% | 2% | 1% | 2% | 5% | 3% |
Don’t know | 7% | 6% | 7% | 13% | 6% | 7% | 8% | 4% | 3% |
Do you know how much you personally need to save for a comfortable retirement?
Gender | Age | |||||||
Total | Male | Female | 18-24 | 25-34 | 35-44 | 45-54 | 55-64 | |
Yes | 38% | 44% | 33% | 34% | 35% | 37% | 40% | 44% |
No | 48% | 41% | 54% | 54% | 51% | 49% | 44% | 44% |
Don’t know | 14% | 15% | 13% | 11% | 14% | 14% | 16% | 11% |
If you do know how much you personally need to save for a comfortable retirement, are you on track to get there?
Gender | Age | |||||||
Total | Male | Female | 18-24 | 25-34 | 35-44 | 45-54 | 55-64 | |
Yes | 55% | 64% | 44% | 62% | 56% | 56% | 53% | 49% |
No | 32% | 25% | 41% | 18% | 27% | 37% | 40% | 36% |
Unsure | 11% | 10% | 13% | 21% | 14% | 5% | 6% | 16% |
Don’t know | 2% | 2% | 2% | 0% | 3% | 3% | 1% | 0% |
