Majority of KiwiSavers facing shortfall, irrespective of fund choice
The majority of KiwiSavers are destined to fall short of their desired retirement income, according to the ASB KiwiSaver Survey.
Tuesday, June 12th 2012, 10:22PM 
2 Comments
by Benn Bathgate
The survey found more than 70% of respondents said the scheme encouraged retirement saving, and also that most respondents had definite retirement goals.
Around half aim to retire on $40,000 per annum, with a target of $600,000 accumulated by the end of their working life.
However, ASB wealth and insurance general manager Blair Turnball said most would fail to hit these targets.
“Looking at the savings rates of almost 350,000 KiwiSavers in the ASB KiwiSaver Scheme we can clearly see that most people are going to fall short of these goals.”
He also dismissed a common industry criticism that the savings shortfall was being exacerbated by the fact too many people were remaining in conservative default funds.
“Regardless of the kind of fund they invest in, many are simply not saving enough,” he said.
“The reality of what KiwiSavers are putting aside for their retirement means they will fall short of the nest egg they need.”
The survey also revealed the impact age and gender have on attitudes towards retirement saving.
Women were less likely to be saving, less confident in their ability to make saving and investment decisions and more risk averse.
Turnball said the survey also identified the group most at risk in terms of retirement readiness.
“They are significantly more likely to be women in families with school-aged children and who have low personal incomes.”
The survey also found less than half of respondents under 30 are saving for retirement, climbing to two-thirds between 30 and 50 and 80% of those between 50 and 60.
Turnball said the results of the survey were promising in that they showed KiwiSaver was encouraging saving, though more work is needed.
“Motivation is one issue we have to address, but beyond that the knowledge gap is still very apparent.”
Benn Bathgate is a business reporter for ASSET and Good Returns, email story ideas to benn@goodreturns.co.nz
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Comments from our readers
Agree you shouldn't have more than $100 k in any one bank deposit, but what else do you do with all the spare cash?
As for the $40k p.a. - absolutely spot on buddy. $40k wouldn't even buy you a half decent holiday. I am thinking that I need more like a couple of hundred a year. What do you think?
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When KiwiSaver was introduced and 4% was a required contribution by employees, this was effectively a 4% pay cut for the workers at the time. People were then faced with ever increasing Fuel costs, Food costs, Insurance costs, Local body rates demands and the list goes on.
It's all very well for Wealth managers, consultants, fund managers on six+ figure salaries to pontificate about how much "Joe Average" should be contributing to their coffers, but the reality is if there is no money after expenses, people can't save.
As far as requirement goes, many people are mortgage free by that age and even a small nest egg of less than 100K in a Bank Term deposit that is not fleeced by Fund Managers is enough to keep people in comfort, for the unexpected expense. You don't need $40k p.a.to be comfortable in retirement!