Three out of four Kiwis have no idea what their KiwiSaver balance will be when they retire, and more than a third of us have no idea what level of income we’ll need to support our desired lifestyle in retirement.
These are the sobering findings from a recent AMP Wealth Management survey of more than 1,000 people from all over New Zealand, and a timely wakeup call as all KiwiSaver members are about to find out how much money they can expect in retirement.
Blair Vernon, Chief Executive of specialist KiwiSaver provider, AMP Wealth Management, says although the survey highlights a critical knowledge gap when it comes to preparing for retirement, help is readily available and it’s never too late to make a plan and get on track.
“There’s some simple but important steps all KiwiSaver members can take that could make a significant difference to their KiwiSaver balances and their quality of life when they stop working. The first thing to do is to give your KiwiSaver provider a call and make sure you’ve got a solid and realistic plan in place.”
Vernon says that despite many New Zealanders likely thinking that making decisions about their retirement income in the current COVID-19 climate should be well down their financial priority list, the fact is that it’s never been more important to have a sensible plan you can stick to.
He says this is especially the case given changes to the type of information about to be presented in people’s annual KiwiSaver statements. Later next month a new, compulsory feature included in all KiwiSaver annual statements will be a dollar value of what each member’s projected weekly income will be from their KiwiSaver in retirement.
“The projected figure will be based on people’s KiwiSaver balances at the end of March and factor in a range of data points including the previous 12 months market movements, including the impact of Covid-19 on the economy,” says Vernon.
“Given recent market ups and downs and the fact that many KiwiSaver members we talk to haven’t really thought about the trajectory they’re on, the projected weekly amount could come as a shock to many and significantly alter their expectations around quality of life in retirement.
“But, rather than getting despondent or dismissing the information and putting it in the ‘too hard basket’ or ‘I’ll worry about that later’ – now is exactly the time to be turning your attention to your KiwiSaver and we think there’s every reason for Kiwis to be optimistic.
“Many of us have 20, 30, or 40 years before we will need to access our KiwiSaver funds, so if you’re in the right KiwiSaver fund or funds to suit your long-term goals and stick to your plan, you’re in a good position to weather this current storm and enjoy the benefits of a lifetime of working when you retire.”
Further findings in the AMP commissioned survey included:
- Only one in three people feel positive about their future financial situation in retirement.
- Fewer than 4 out of 10 have received financial planning advice.
- Of those that have given some thought to how much they’ll need on retirement, most anticipate needing $50k per year on retirement, or $960 per week.
Click here to find out how much you can expect to have in KiwiSaver come retirement, and for a little help planning for your future, click here.