Don’t fear the figures

KiwiSaver members shouldn’t be deterred from saving for retirement by the enormous sums of money cited by some financial experts as the bare minimum needed to have a comfortable life post-work.

“Saving something – anything – for retirement is far better than doing nothing at all,” says Joe Bishop, Kiwi Wealth General Manager Customer, Product and Innovation.

“Some of the amounts we’re being told we need to have saved for retirement are, for most of us, unreachably big – so big that a lot of people actually give up even trying. It’s possible these target figures are hindering, rather than helping, more Kiwis saving for retirement.”

Last month, a New Zealand financial adviser said $2 million in savings was required for a “comfortable” retirement. Massey University, meanwhile, says $400,000 is the target for people seeking a comfortable retirement at age 65, meaning a 30-year-old would need just over $100,000 tucked away at age 30.

“These are enormous sums that people might consider to be frightening and unattainable,” says Mr Bishop. “If people think they’ve got no chance of reaching a goal, they won’t try. While it’s good to be straight-up and forthright, it’s important to be constructive, too.”

For those Kiwis with a KiwiSaver account, that means taking a greater interest in their investment – regardless of how much they have saved.

“Circumstances change throughout our lives, so making sure our KiwiSaver investments are up-to-date is probably the best thing any member can do,” says Mr Bishop.

At a time of year when many New Zealanders are planning for a New Year or contemplating a change in job or lifestyle, it’s also an opportune time to review their financial situation.

“For example, it’s likely KiwiSaver contribution rates are being overhauled in April to provide more flexibility. You might use your KiwiSaver investment as a deposit on your first house, but are you able to keep making contributions, even at a lower rate? And if you’ve had a pay rise, are you able to lift your contribution rate?

“Remember, too, that there’s ‘free money’ available to KiwiSaver members, with employer contributions and the government’s yearly member tax credit of up to $512 if you put in at least $1,042.86 each financial year.

“So there are big advantages to being in KiwiSaver. Whether you’re saving a little or a lot, maximising your investment with a little understanding can see it grow quickly, and those big, scary numbers being bandied about won’t seem quite as frightening.”

Kiwi Wealth’s Future You® digital tool allows members to select a retirement lifestyle goal to see how much they may need for retirement – or they can customise their own goal to get an estimate of what retirement may cost.

Members can then get a projection for how much they could have – from their KiwiSaver account and NZ Super – and see how making changes to their account could make a difference.

“We give our customers the information they need to help them make decisions, helping provide context around what they have today, and what they might have in the future, and ultimately giving them more control around their KiwiSaver investment.

“We’ll all have uniquely different paths to retirement and KiwiSaver shouldn’t be treated as one-size-fits-all,” says Mr Bishop. “That’s why we built Future You – to give our members the power to maximise their investment on their terms.”

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