Half of all KiwiSaver members think they know how much money they will need to get by in retirement, but three-quarters have no idea how much they will actually have, new research from Kiwi Wealth shows.
The Horizon research of 781 current KiwiSaver members, commissioned by KiwiSaver scheme provider Kiwi Wealth, shows 77% of people do not know what their KiwiSaver account will be worth when they retire. 55% estimate they would need $400-$600 a week, after tax, to live on.
Joe Bishop, Kiwi Wealth Head of Retail Wealth and Marketing, said there was a large gap between people’s retirement income expectations and the amount they needed to save to achieve it.
“For an initiative designed to encourage retirement savings, it is alarming that 77% of KiwiSaver members don’t know how much will be in their account when they retire.
“It’s likely that many are seriously over-estimating how much it will be, and seriously under-estimating how much they’ll need to have the retirement lifestyle they hope for.
“Half of the KiwiSaver members surveyed thought they would need $400-$600 a week to get by when they reach retirement age. Massey University research shows that even for a ‘no frills’ retirement, someone living in a metropolitan centre will need $490 a week.
“Current New Zealand Superannuation for a single person is around $370 a week – so there is a shortfall that needs to be bridged by KiwiSaver.”
The survey results highlight that many KiwiSaver members are not taking action with their KiwiSaver investment, said Mr Bishop. As a result, they could be losing out on money for their retirement, therefore compromising their future retirement lifestyle.
“The prevailing sentiment appears to be that many people approach their KiwiSaver accounts like bank accounts when they should be thinking about them as investments. Many of these accounts are lying ignored in default funds which may not be performing as well as other funds more aligned to the customers’ risk profile and investment timeframe.
“Too many KiwiSaver members are short-changing themselves. They need to be more involved with their investment and make informed decisions,” Mr Bishop said.
“The onus, too, must be on KiwiSaver providers to engage more with their customers and help them make good decisions for their investments. That’s the best way for KiwiSaver members to increase their wealth.”
Kiwi Wealth KiwiSaver Scheme survey: key points
- 77% of KiwiSaver members don’t know what their KiwiSaver account will be worth when they retire.
- 27% of KiwiSaver members don’t know what type of fund their KiwiSaver account is in.
- 31% have never reviewed the type of fund their KiwiSaver account is in (i.e. conservative/balanced/growth). For women this increases to 38%.
- 14% don’t know who their KiwiSaver provider is, with people under 25 years least likely to know (38% were not sure).
- 75% said they had not or don’t recall receiving information on how to use KiwiSaver to reach a retirement goal when they signed up.
- 63% expect New Zealand Superannuation to be available when they retire. A third of people aged 25-34 said they were “really not sure” super would be available to them when they retire.