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Houses crowd out retirement savings

A focus on housing appears to be crowding out retirement in people’s savings plans, according to the latest AMP SuperWatch survey.

Monday, December 8th 2003, 12:08PM

While other savings categories have remained fairly constant, the number of people saving for a home purchase has increased by 70% since January this year, from 10% to 17%. People aged 25-34 are even more likely to be saving for a house deposit, with 35% saying they are currently doing so.

Despite the increase in the numbers saving for a deposit, there has been no increase in the proportion of people saving to pay off their house, says AMP managing director Ross Kent.

"The focus on saving for house deposits seems to be leaving people with less discretion about other forms of retirement savings. Since the beginning of the year there have been significant declines across seven retirement savings categories. Those paying off a mortgage have declined by 58%, saving into bank or term deposits have declined by 63%, and those saving for retirement by investing in their own business have declined by 60%.

"The increase in people saving for house deposits may indicate several things. The property boom may be pushing home purchase further away for younger, first home buyers. With demand outstripping supply, people may be having to save more to buy a house they desire.

"Results may also indicate that first home buyers are thinking that they need to save to get in on the property market now before prices are inflated too far out of their reach.

"Buying a house is still very much part of the New Zealand dream, but there are worrying signs that it becoming all consuming and swamping any other kind of saving people do."

Kent says another notable result has been a big jump in the number of people who consider current levels of New Zealand Superannuation would be adequate to support them in their retirement.

"In August 2001 only 21% of people thought the pension would be adequate support, but that has increased to 32% in the latest survey. However, only 23% of people are confident that a similar level of pension will be available for them when they retire – a result consistent with previous SuperWatch surveys.

"Another notable increase has been in people who are expecting the government, families, the community and employers to take some responsibility to provide for them in retirement.

"These SuperWatch results show there is no room for complacency over retirement savings. Every little bit will help people do the things they want to be able to do in retirement, and the sooner they start the better," says Kent.

 

  1. Which one of the following are you currently saving for?
  2. August 2001

    (%)

    June 2002

    (%)

    Jan

    2003

    (%)

    Nov

    2003 (%)

    Paying off your house

    35

    38

    38

    36

    A new car

    11

    12

    16

    13

    Travel or holidays

    34

    38

    35

    37

    Superannuation/retirement

    46

    50

    45

    47

    Setting up or investing in your own business

    12

    10

    12

    15

    Your own or your children’s education

    24

    26

    30

    29

    Deposit for a home purchase

    12

    12

    10

    17

    None

    17

    13

    16

    14

    Don’t know

    1

    -

    1

    2

    All Respondents

    (502)

    (554)

    (654)

    (662)

  3. Which of these are you currently doing to save for your retirement?
  4.  

    August 2001

    (%)

    June 2002

    (%)

    Jan 2003

    (%)

    Nov

    2003

    (%)

    Paying off a mortgage on your home

    33

    38

    36

    15

    Have a formal, long term superannuation plan

    38

    43

    43

    34

    Bank or term deposit investments

    28

    28

    34

    13

    Investing in shares

    25

    25

    30

    11

    Unit trust investments

    19

    16

    18

    9

    Investing in your own business

    17

    14

    15

    6

    Residential property other than your own home

    18

    18

    17

    10

    All Respondents

    (502)

    (554)

    (654)

    (662)

     

  5. New Zealand Superannuation, that is the pension paid by the Government in retirement, is currently $245 per week after tax for a single person living alone or $377 per week after tax for a married couple. If you were retiring today, would this be adequate to support you in your retirement?
  6.  

    August 2001

    (%)

    June 2002

    (%)

    Nov

    2003 (%)

    Yes

    21

    19

    32

    No

    75

    78

    65

    Don’t know/no answer

    4

    4

    3

    All Respondents

    (502)

    (554)

    (662)

     

  7. Which of the following do you feel should take some responsibility to provide for you in your retirement?

 

August

2001

(%)

June 2002

(%)

Jan 2003

(%)

Nov

2003

(%)

The government

67

65

63

71

Yourself

90

93

93

92

Your Family

15

13

15

20

The Community

7

5

4

10

Your Employer

20

26

25

27

Don’t know/no answer

2

-

-

1

All Respondents

(502)

(554)

(654)

(662)

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build ▼4.94 - - -
AIA - Go Home Loans ▼7.49 ▼5.79 ▼5.49 ▼5.59
ANZ ▼7.39 ▼6.39 ▼6.19 ▼6.19
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - ▼5.79 ▼5.59 ▼5.59
ASB Bank ▼7.39 ▼5.79 ▼5.49 ▼5.59
ASB Better Homes Top Up - - - 1.00
Avanti Finance ▼7.90 - - -
Basecorp Finance 9.60 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One ▼7.54 - - -
BNZ - Rapid Repay ▼7.54 - - -
BNZ - Std ▼7.44 ▼5.79 ▼5.59 5.69
BNZ - TotalMoney ▼7.54 - - -
CFML 321 Loans 6.20 - - -
CFML Home Loans 6.45 - - -
CFML Prime Loans 8.25 - - -
CFML Standard Loans 9.20 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - ▼5.69 - -
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Co-operative Bank - Owner Occ ▼6.95 ▼5.79 ▼5.59 5.69
Co-operative Bank - Standard ▼6.95 ▼6.29 ▼6.09 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - ▼5.99 ▼5.89 -
First Credit Union Standard ▼7.99 ▼6.69 ▼6.39 -
Heartland Bank - Online ▼6.99 5.65 5.55 5.55
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.60 ▼6.65 6.40 -
ICBC 7.49 ▼5.79 ▼5.59 5.59
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank ▼7.25 6.89 6.59 6.49
Kiwibank - Offset ▼7.25 - - -
Kiwibank Special ▼7.25 5.99 5.69 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society ▼7.94 5.95 6.09 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank ▼7.49 6.95 6.29 6.29
SBS Bank Special - 6.15 5.69 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo ▼4.94 5.15 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.75 - - -
TSB Bank ▼8.19 6.49 6.49 6.49
TSB Special ▼7.39 5.69 5.69 5.69
Unity 7.64 5.99 5.69 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society 8.10 6.05 5.79 -
Westpac ▼7.39 ▼6.39 ▼6.09 ▼6.19
Westpac Choices Everyday ▼7.49 - - -
Westpac Offset ▼7.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - ▼5.79 ▼5.49 ▼5.59
Median 7.49 5.99 5.79 5.69

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