13 Jun 2012

Savings not matching retirement expectations - surveys

7:15 am on 13 June 2012

People are not saving enough to live comfortably in retirement according to two separate surveys.

Surveys by ANZ New Zealand and ASB Bank found many people are underestimating how much they need to maintain their lifestyle in retirement.

ANZ's Retirement Savings Confidence Barometer shows two-thirds of New Zealanders are saving, but only one half feel confident that they are saving enough.

Managing director at ANZ Wealth John Body says KiwiSaver providers need to spell out how contributions link to retirement funds and people need to lift savings to avoid a rude shock.

"There is a disconnect between most people's expectations and the current level of savings, and that really is in line with our view that there is a need for a greater increase in contributions to either KiwiSaver or additional savings by people if they want to achieve the lifestyle they aspire to."

He says a target of 7% of income or above would be desirable.

Mr Body says confidence is highest among men and younger people who have just started saving through KiwiSaver, while those closest to retirement and women are the least confident of reaching their savings goals.

ASB said its survey showed KiwiSaver contributions are too low to meet respondents' expectations of a comfortable annual income of $40,000 a year when they retire.

It says the actual savings rate would only garner $70,000 when people retire, not the $600,000 respondents aspired to.