Eurozone woes and slow economic growth in NZ dampening savings confidence for retirement, ANZ Wealth survey finds

Eurozone woes and slow economic growth in NZ dampening savings confidence for retirement, ANZ Wealth survey finds

By Amanda Morrall

Insecurities about achieving sufficient savings levels for retirement are growing amid the deepening debt crisis in Europe and patchy economic growth domestically, according to a survey gauging Kiwi savings confidence.

ANZ Wealth, in its latest Retirement Savings Confidence Barometer report, highlighted a 5% drop in confidence levels among the 56% of New Zealanders actively saving for retirement.

David Boyle, general manager of fund management for ANZ Wealth, said while macro-economic circumstances were gloomy, the reality for individual savers was not as bleak as many perceived it to be. That was especially the case with KiwiSaver funds, many of which have held up well under the weight of the global financial crisis.

"The returns this year across the board have been pretty good notwithstanding the volatility. What we've found as we've sent our annual statements out is there is quite a bit of surprise to what they have got to what they thought they might have.''

With balances going up over time, Boyle said he expected confidence levels would increase and yet it was clear from the survey results that there is still a disconnect between the amounts people are saving and what they need to save.

ANZ Wealth, through its new quarterly barometer survey, measures confidence levels by drawing participants' attention to the financial gap between what they can expect to receive from New Zealand Superannuation and how much above that they want per week.  

How much do you need to save for retirement? See Sorted.org.nz's retirement calculator here. 

“For many people this is the first time they’ve been prompted to consider what they are  saving towards, so when they match their chosen income with the lump sum required, that’s where the doubt kicks in,” says John Body, managing director of ANZ Wealth and Private Banking.

Four out of 10 people surveyed indicated they wanted an income of $500 per week or more (above NZS) in retirement. To achieve that, over a 20 year period of retirement, that would require a lump sum of around $415,000.

The savings insecurity was more acute among older New Zealanders, ages 45-64, according to the survey results.

It found that 53% of 15-29 year old were confident about meeting their retirement goals, compared with 35% in the 45-64 age bracket.

Among the survey participants aged 15-29, 52%  were saving for retirement and along with 49 percent of those earning under $45,000 a year.

For the majority, KiwiSaver was their primary savings vehicle.

Body said KiwiSaver had been "enormously successful in introducing the savings habit to a whole new generation and demographic of New Zealanders."

“When you look at the participation in the scheme from all sections of the population then there’s good reason to expect the confidence levels we are starting to measure in our Savings Barometer will improve over time.”

Savings confidence Total Male Female
very confident 15% 19% 12%
Confident 29% 35% 23%
Not very confident 37% 32% 42%
Not at all confident 19% 14%` 23%

 

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