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KiwiSaver: a road to dignified retirement
Having financial security in retirement is critical, as without it retirees may have a poor quality of life and a lack of choices, from where to live to accessing healthcare.
Research from the UK has shown that, globally, ‘in all developed economies, there has been a gradual shift in responsibility for social protection of individual citizens from the state to the individuals themselves (Financial Well-Being A Conceptual Model and Preliminary Analysis, 2017)’ .
This shift has consequence and will affect Kiwis standard of living in retirement. ‘Citizens must operate in an increasingly complex financial marketplace to meet their own social protection needs and those of their household’ and ‘this has raised concern about the extent to which they are equipped to do so’.
Over 70% of respondents to a 2021 FSC survey thought they would need to work past retirement age to fund their retirement. The same survey reflected that 65% of respondents thought they were not on track to have enough money for a happy retirement or be able to afford where they live when they retire. Coupled with the need to balance paying for today and saving for tomorrow, it is hard to save for the future and to predict how much retirement might cost. We have differing levels of what we expect - some might look to spend their retirement travelling, others might choose (or need) to continue work or volunteer at home.
A useful guide is Massey University's yearly New Zealand Retirement Expenditure Guidelines, where a guide provides how much weekly retirement expenditure is needed in New Zealand. The guidelines offer a ‘basic’ or ‘no frills’ and a more comfortable ‘choices’ calculation for metro and provincial single and couple retirees based on current retirement expenditure needs. It shows that most New Zealanders already need to have more income than the current weekly NZ Super provides.
The headline '3.25 million KiwiSaver members and $93.7 billion asset numbers' looks good on the surface. But dig beneath the figures and we see that active participation and contribution rates aren’t going to meet our individual needs when we reach 65, especially for younger generations. Planning and saving for retirement is getting more difficult on one hand, but is a necessity on the other.
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Patrick Wang
