Kiwis who approach retirement savings as a marathon, rather than a 100 metre dash, stand to gain a much bigger winner’s cheque at the finish line.
Kiwi Wealth’s Joe Bishop said many Kiwis were leaving active retirement savings planning too late in life, relying on a final stretch sprint to bolster retirement income.
“We’re seeing a ‘mid-50s sprint’ mentality from our customers. Being engaged and active in your savings as you get closer to retirement is great, but to give yourself the best chance of making the finish line in good financial shape, decisions have to be made much, much sooner.”
“That’s why we think of retirement saving as a marathon. For many Kiwis retirement is a long way off, just as the finish line is a long way off when you start out in a marathon. But to give yourself the best chance of finishing a marathon you have to make a series of strategic decisions that keep you in the race. The most important of which is knowing what your race or retirement goals are.”
Kiwi Wealth’s Future You tool shows that a 30-year old male earning an income of $50,000 and contributing 3% into the Kiwi Wealth KiwiSaver Scheme Balanced Fund could have $175,600 at 65, potentially giving him an estimated income of $8,700 per annum. If he only started investing in his KiwiSaver account when he turned 50, he could have $57,900 available at age 65 – or $2,900 per annum.
Mr Bishop said that analysis of 27,000 users of Kiwi Wealth’s Future You retirement forecasting tool may illustrate that New Zealanders are leaving their retirement savings late. One-third of all users were aged over 55, two-thirds were aged over 45.
“We advocate people treat their retirement savings as a marathon rather than a sprint. Saving smaller amounts over a longer period is less risky, delivers better investment returns and is much less stressful for people.
“For most Kiwis that means engaging with their KiwiSaver investment earlier in life. That’s hard for people to do when you’re dealing with an investment horizon of around 30 years. People just can’t see, or plan, that far ahead into the future.
“KiwiSaver providers therefore have a moral imperative to help their customers better understand their future wealth and how small decisions now can have a huge impact on their future.
“For example, members of the Kiwi Wealth KiwiSaver Scheme can use our Future You tool to select a retirement lifestyle goal, see how much their KiwiSaver account could provide them, and identify if they’re on track to achieve their goal. Members can assess how changes to their investment direction or contributions might bridge any shortfall, and can then implement changes to their investment direction within the tool.
“The feedback from our members has been excellent. They like receiving a real-life snapshot of their potential future wealth and having the power at their fingertips to assess their options and implement changes.
“The secret for people going on to live the life they expect in retirement is to start planning for it as early as possible. Small changes you make to your KiwiSaver today could make a big difference when it comes to achieving the retirement lifestyle you want.”
 Based on the man living the current Statistics New Zealand average life expectancy plus an additional 5 years.
Kiwi Wealth Limited is the issuer and manager of the Kiwi Wealth KiwiSaver Scheme. Kiwi Wealth Limited is owned by Gareth Morgan Investments Limited Partnership (GMILP). GMILP is owned by Kiwi Wealth Management Limited. Kiwi Wealth Management Limited is a wholly owned subsidiary of Kiwi Group Holdings Limited (ultimately held by New Zealand Post, Guardians of the New Zealand Superannuation Fund and the Accident Compensation Corporation).
The Kiwi Wealth KiwiSaver Scheme currently has more than 170,000 members, with $3 billion in funds under management. The product disclosure statement is available here: www.kiwiwealth.co.nz/kiwisaver/.