New Zealanders Expecting to Work Well Into Their 60s

4 February 2009 - Article courtesy of Scoop.co.nz

With an average expected retirement age of 64, high net worth individuals in New Zealand are anticipating they will have to work well into their 60s. This is according to a quarterly survey conducted by ING, the global financial services group, in 13 markets across Asia Pacific.

The research highlighted that New Zealand private investors expect to be working for longer than any of their counterparts across the region with 71 percent not expecting they will be able to retire until after 61.  This compares to 46% of Australian investors, 44% of Singaporean investors, 37% of Japanese investors and only 16% of Chinese investors thinking they will have to work past 61.

ING commissioned research across thirteen Asia Pacific markets, amongst private investors aged 30 years and above who had disposable assets or investments totalling US$100,000 or above.

Although New Zealand had the highest anticipated retirement age in the region, the majority of investors surveyed (60%), felt confident they are either very well or quite well prepared financially for their retirement. In Australia, only 51% of investors felt very or quite well prepared. However, New Zealand investors anticipated that they would need significantly lower levels of household income to live in retirement than their Australian counterparts.

Commenting on the results, David Boyle, ING Head of KiwiSaver Distribution said "We believe that the introduction of KiwiSaver, the recent turmoil in global financial markets and an increase in media coverage around saving for retirement, has led to a heightened awareness in New Zealand about the level of savings required to live well in retirement. There is still a long way to go before New Zealanders become fully aware of the level of the savings needed to generate the level of income they will need to maintain a good lifestyle in retirement.  As New Zealanders start to educate themselves about how much income they will need for later years, so they are becoming more realistic about when they will be able to comfortably retire from full-time employment.

"There is still some way to go to catch up with the savings habits of our Australian neighbours, who have had a compulsory superannuation regime for the last 15 years. These results are positive however as they indicate that New Zealanders are taking their retirement income seriously and starting to put better savings strategies in place."

When looking at the anticipated source of their retirement income, excluding non-government superannuation schemes, these New Zealand investors expect that 33% will come from a government source and 37% from savings. This compares to 29% in Australia who expect income from a government source and 40% from savings.

ING's David Boyle added "Most New Zealanders no longer expect that the Government will provide fully for them in retirement, hence people are now much more aware that they have to take ownership for their own retirement savings. This is one of the reasons why the KiwiSaver scheme has been even more successful than the Government originally anticipated. The introduction of a universal superannuation scheme for eligible New Zealanders to join via the workplace has certainly helped the process of starting to save for retirement."

According to the research, 47% of New Zealand high net worth investors have joined a KiwiSaver scheme (up from 40% last quarter) with a further 15% indicating that they are looking to join a KiwiSaver scheme in the second quarter of 2009.

Boyle continued "We expect that the lowering of the income threshold from 4% to 2% will see the numbers of people joining KiwiSaver increase further. That said, the 2% threshold will lead to lower levels of long term savings overall in the future. 2% is a good start for those who need to introduce themselves to savings, but it is also worth noting that the Australian compulsory savings regime starts with a minimum threshold of 9%."

Despite the recent collapse in global financial markets, 62% of those investors who had joined KiwiSaver are confident that joining a scheme is a good idea. The majority of investors (59%) also believe that the scheme should be made compulsory to encourage New Zealanders to save more for retirement.

David Boyle continued, "It is encouraging to see that investors are considering their retirement savings and starting to make realistic assessments about the level of savings they will need to have a reasonable income in retirement.  Even during this most turbulent time in our investment history joining KiwiSaver is still a good way to for people to plan more effectively for how they will fund their retirement."

print