New Zealanders clearly recognise the need to save for retirement, despite the current economic conditions, with many believing they must supplement New Zealand Superannuation to enjoy the retirement they want, according to the latest AMP SuperWatch research.
In the survey, when asked if retirement income from the Government’s pension scheme, New Zealand Superannuation, is adequate, nearly three quarters say they require additional income from personal investments or savings to realise their aspirations.
Notwithstanding current economic conditions, New Zealanders continue to save for retirement. Of those who are saving, 58% say they are saving for retirement. This is significantly higher than levels in February 2007 but lower than the high of 65% reached a year ago.
Commenting on the survey, AMP Financial Services NZ managing director Jack Regan said the results reflect New Zealanders’ retirement expectations.
“For many, New Zealand Superannuation will not let them live the life they want in retirement. The additional savings intention, over and above NZ Super, reflects people’s expectations of a better retirement. This is a theme that has been consistently reflected throughout the history of the survey,“ he said.
Two thirds of those already in KiwiSaver do not intend to vary their contribution to the lower minimum contribution level of 2% effective from 1 April 2009. Of the 23% likely to reduce their contribution, a quarter will save the money elsewhere, 13% will use it to pay off debt and less than half will use the extra 2% to cover increased living costs.
“This reinforces people’s commitment to save to match their needs and aspirations for a better retirement. Despite these extraordinary times and the pressure on personal incomes, people continue to embrace retirement savings schemes,� Regan said.
According to the survey, KiwiSaver’s popularity continues, especially among younger people. Almost 40% of those saving for retirement have already joined KiwiSaver and a further 26% say they intend to join this year. Of those aged between 18 and 24 years more than a third intend to join.
For the first time, of those saving for retirement, more see KiwiSaver (51%) as a way to save for retirement than paying off their mortgage (49%) or bank deposits (43%).
The survey also shows, for the first time, the level of confidence people have in their decision to join KiwiSaver. Most are confident they made the right decision with nearly two thirds saying they are confident or very confident.
Regan says New Zealand’s preference for KiwiSaver as a retirement savings option is becoming clearer.
“People are less inclined to connect repaying their mortgage and having the retirement they want. More people are joining KiwiSaver and those already in the scheme don’t intend to reduce their contribution, despite the opportunity to do so. In people’s minds, KiwiSaver is becoming integral to a better retirement,� he said.
According to the survey, more people intend to work beyond the age of eligibility for New Zealand Superannuation. Only a quarter expect to retire before the age of 65, down significantly from 35% a year ago.
AMP has been surveying New Zealanders’ retirement saving attitudes and behaviours since 2000. AMP SuperWatch is currently undertaken twice a year.