Kiwis 'not saving enough to retire on'

Kiwis aren't saving enough to retire on, says the ASB and ANZ banks. Photo / Mark Mitchell

New Zealanders aren't saving enough to meet the income levels they would like to retire on and women are lagging behind, two surveys by banks show.

Research by both ASB and ANZ banks found the largest number of Kiwis want to retire with a total income of around $40,000 a year or around $770 per week.

That includes New Zealand Superannuation which is presently $18,200 per annum or $349 per week.

But ASB found its 350,000 KiwiSaver members were on average saving just $50 a week. Over a 30-year saving period that could accumulate to around $70,000 which would add just $75 a week to New Zealand Superannuation.

ASB's executive general manager wealth and insurance Blair Turnball said someone who wanted to live off $40,000 a year needed to retire with a pool of around $600,000 if they wanted to make it last for 25 years - the timeframe in which people felt they could live beyond the retirement age.

"This [$70,000] is $530,000 less than the average respondent in our survey aspired to, and only 55 per cent of the aspiration annual $40,000 income. It is alarming how big the gap is."

Turnball said most people linked what they wanted to be living off in retirement to what they were earning today but few appeared to have made the connection to the amount they needed to save to get there.

"The hard, cold reality is that if you are saving $50 a week that won't give you an awful lot."

Turnball said the main issues were that people were living longer. He said a child born today had a 50 per cent chance of living to 100.

ANZ's survey revealed half of Kiwis did not feel confident that they would reach their retirement savings' target.

Confidence was also lower among women and older people.

Only 41 per cent of women felt confident of reaching their savings goals compared to 57 per cent of men.

A third of people over 60 said they were not confident at all about saving enough for retirement.

The ASB survey found fewer women were saving for their retirement, they were less confident than men in making investment decisions and 40 per cent had not thought about their retirement options at all.

John Body, managing director ANZ Wealth and Private Banking New Zealand, said New Zealanders were saving around 2 to 3 per cent of their take-home pay whereas Australians were saving 9 per cent and many in Asia were saving 12 per cent.

"We are just not saving enough."

He said 70 per cent of those questioned did not believe they would be able to rely on NZ Superannuation.

New Zealand has a low level of poverty in retirement at the moment but Turnball said a lot of those currently in retirement were used to being frugal.

"People growing up today are much bigger consumers. Unless they save there is going to be sharp shock."

People needed to think about how much they wanted to live off in retirement and plan how to get there.

It was important that saving started at an early age and that younger people should consider taking more risks by investing in higher growth assets.

The ASB survey was based on 723 respondents while the ANZ survey questioned 1000 people.