The continued rise of KiwiSaver has failed to prevent an unexpected drop in retirement savings confidence, but commentators say it is too early to tell whether the result is a temporary blip.
ANZ’s latest Retirement Savings Confidence Barometer found 56% of New Zealanders who are saving toward their retirement are not confident they will reach their savings goal, representing a 5% fall in confidence since April.
KiwiSaver is set to reach the 2 million member milestone in the next few months and it appears to be having a positive impact among younger people, with 53% of 15–29 year oldsconfident compared to 35% of 45-64 year olds.”
Of the 61% of those surveyed who are saving, 85%of younger people and 77% of those earning under the average wage say that KiwiSaver is their primary means of saving towards their retirement.
“The deepening debt crisis in Europe and prolonged patchy growth in the New Zealand economy have probably contributed to the drop in confidence,” says John Body, managing director ANZ wealth and private banking.
“While the survey found that almost two-thirds of New Zealanders are saving in some form, this drop of confidence is still surprising.”
ANZ general manager funds management David Boyle said many New Zealanders hadn’t given any thought as to the income they would like to have in retirement and how much they would have to save to achieve this.
“I think the 5% drop may be aligned not only with the current environment but also as people start realising what they want and what they can achieve there’s a bit of a disconnect.”
Boyle also said it was important for people to be realistic about what they could achieve in terms of retirement savings.
“Nearly 40% have chosen over $500 a week [retirement income on top of NZ Super] which as a lump sum is going to be quite significant and in most cases very difficult to achieve.”