Young ones think KiwiSaver enough for retirement

Almost half of those aged between 18 and 29 are confident that KiwiSaver alone will support them into retirement according to the ASB Investor Confidence Survey.

Thursday, January 28th 2010, 6:00AM

by Jenha White

ASB Head of Investment Services Jonathan Beale says this is a pleasing statistic for KiwiSaver providers as they have been targeting that age group and it is good to see people taking KiwiSaver seriously.

He says young investors have time on their hands to build a significant pool of savings prior to their eventual retirement but how do they know KiwiSaver alone will provide them with enough savings?

"Ä lot of people are paying the minimum of 2% and are in conservative default funds. The first recommendation was to join up and now people need education."

ING head of KiwiSaver distribution David Boyle agrees saying a lot of people don't know what they need in retirement and therefore education about KiwiSaver is paramount so people further understand it.

"I don't believe KiwiSaver will be the only thing to provide people with what they need for retirement, it's only one piece of the pie and it's a significant growing part of New Zealand's wealth accumulation."

Financial columnist and author Mary Holm says how much you need for retirement is an open question and some people overdo saving.

"If you start fairly young and save 2% of your pay that could be enough, how long is a piece of string?

"If young people are putting money in KiwiSaver good on them and well done, they're probably doing better than their parents at that age."

Holm suggests that people should put the minimum in KiwiSaver as long as they are contributing at least $1,043 a year to get the maximum government tax credit. She suggests that people could then save other money elsewhere, so they have accessibility to those savings if they need it.

The survey also showed that a vast majority of older age groups did not believe KiwiSaver alone would be sufficient to support them into retirement.

Beale says the savings of those close to retirement will have been built up through avenues other than KiwiSaver, which is a very recent addition to the range of retirement savings options.

He says overall there are encouraging signs in the economy, but there will still be a lot of change over the coming months and the recovery is more likely to be gradual than sudden.

"With this in mind, investors should seek professional advice to help them with their investment decisions."

Jenha is a TPL staff reporter. jenha@tarawera.co.nz

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