Retirement savings still an up-hill battle
Research shows New Zealanders are still a conservative lot when it comes to managing money.
Tuesday, March 25th 2003, 6:54AM
Only around half of New Zealanders are saving for their retirement and most people have no idea what a realistic retirement savings target is, according to the latest AMP SuperWatch survey.
"The latest survey confirms that only 47% of people are specifically saving for their retirement, which has remained a fairly steady finding since SuperWatch started in 2000. However, three-quarters of respondents think they will want more than New Zealand Superannuation to live off in retirement," says AMP managing director Ross Kent.
"When asked how much they will need to have saved by the time they retire in order to have the income they think they’ll need, nearly half have no idea how much they need to save. Of the remainder, only one in five have a reasonable expectation of their retirement savings target1.
"Interestingly, as many appear to over-estimate their savings target as under-estimate it. Not saving enough is always going to be a problem, but if people think they have to save far more than they do, it may put them off even attempting a savings plan," Kent says.
"The results confirm that quality advice and on-going financial education are vitally important to help people set and attain realistic financial goals.
"Equally important is finding ways of encouraging people to save and removing the disincentives. For the majority of working New Zealanders – those who earn less than $38,000 - there is still an enormous disincentive to save through the workplace because of the current tax anomaly around employer contributions to saving schemes. We would be delighted if there is an opportunity to address this in the budget.
"I would also endorse the recent comments by the chairman of the Investment Savings and Insurance Association, Simon Swanson, that saving is an issue not just for the Government or industry, but for everyone. Employers, unions, and the community need to join with Government and the industry to find a solution," he said.
The survey found that, despite the lack of clarity about what they should be saving, most people have a clear idea about when they want to retire. Nearly a third want to retire in their 50s and less than 10% intend working over the age of 65.
Kent said a number of new questions were asked in this survey to try and understand more about people’s attitudes to savings and debt.
"More than 40% of New Zealanders regularly use borrowed money to buy cars and larger appliances and to pay for house improvements such as a new kitchen or deck. One in eight of us will also use credit to buy clothes, but interestingly less than 10% use it to pay for holidays and Christmas.
"Our willingness to use debt might suggest otherwise, but we are still fairly conservative in our attitudes to saving. On average people agree with the statement that living within their means, putting a little aside on a regular basis, saving up for things rather than going into debt, and building and protecting their asset base is the way they approach saving," Kent says.
Note for editors: The SuperWatch survey was conducted between October 2002 and January 2003 and has a sample size of 489. All respondents were aged 18 or over. The margin of error is a maximum of +/- 4.4% at 95% confidence level.
1
Information derived from co-relation of age, desired income in retirement, and estimated savings target.1 Which one of the following are you currently saving for?
|
July 2000 (%) |
August 2001 (%) |
Feb 2002 (%) |
June 2002 (%) |
Jan 2003 (%) |
|
|
Paying off your house |
41 |
38 |
40 |
39 |
39 |
|
A new car |
13 |
11 |
12 |
11 |
13 |
|
Travel or holidays |
40 |
36 |
38 |
38 |
38 |
|
Superannuation/retirement |
49 |
46 |
42 |
50 |
47 |
|
Setting up or investing in your own business |
13 |
12 |
10 |
10 |
13 |
|
Your own or your children’s education |
32 |
27 |
27 |
26 |
31 |
|
Deposit for a home purchase |
14 |
13 |
13 |
12 |
9 |
|
None |
12 |
15 |
17 |
13 |
17 |
|
Don’t know |
- |
1 |
- |
1 |
1 |
|
All Respondents |
(524) |
(502) |
(501) |
(554) |
(489) |
2. Thinking about the money you personally will live off in your retirement, in today’s terms, how much money do you think you will need each year before tax to live comfortably?
|
Jan 2003 (%) |
|
|
$10,000*-$19,000 |
4 |
|
$20,000-$29000 |
16 |
|
$30,000-$39,000 |
24 |
|
$40,000-$49,000 |
14 |
|
$50,000-$59,000 |
12 |
|
$60,000-$99,000 |
7 |
|
$100,000+ |
3 |
|
Don't know |
19 |
|
Missing info |
2 |
|
All Respondents |
(489) |
* Current level of NZ Super is $10,000 per annum
3. How much money do you think you will need to save, as a total figure, by the time you retire, in order to have the [INSERT FROM 2] per year you would like in retirement?
Jan 2003 (%) |
|
Less than $250,000 |
12 |
$250,000 - $499,999 |
11 |
$500,000-$749,999 |
13 |
$750,000-$999,999 |
4 |
$1m - $1.249 m |
7 |
$1.25m + |
4 |
Don't know |
43 |
Other |
2 |
Missing info |
3 |
All Respondents |
(489) |
4. At what age do you plan to retire?
|
|
Jan 2003 (%) |
|
50-55 |
10 |
|
56-60 |
20 |
|
61-65 |
35 |
|
66-80 |
8 |
|
Don’t know |
11 |
|
Missing info |
17 |
|
All Respondents |
(489) |
5. I am going to read out a list of items and I would like you to tell me if you were to purchase them, which you would generally pay for with money you already had or would save specifically for and which of them you would generally pay off over a period of time, either by loan, hire purchase or credit card? (IF CREDIT CARD: If you used your credit card to purchase this item, would you pay that back straight away or over a period of time?)
|
Money already had / save for (%) |
Pay off a debt (%) |
Would not buy (%) |
All respondents |
|
|
A major appliance such as a fridge, washing machine, or dishwasher |
54 |
44 |
2 |
(489) |
|
A holiday away from your home town longer than a weekend |
87 |
9 |
4 |
(489) |
|
A car |
48 |
47 |
4 |
(489) |
|
A major clothes expenditure |
82 |
12 |
6 |
(489) |
|
Christmas, including presents or anything else |
89 |
8 |
2 |
(489) |
|
Major house improvements such as a new kitchen, or a deck |
52 |
42 |
6 |
(489) |
6. I’m going to read out a list of statements that other people have made about savings. I would like you to rate how much you agree or disagree with each one on a scale of 1 to 10, where 1 means you strongly disagree and 10 means you strongly agree.
|
|
Jan 2003 (average out of 10) |
|
I believe in living for today, and letting tomorrow take care of itself. |
3.4 |
|
I’m good at saving on a short term basis for specific goals, but don’t have the discipline for longer term saving. |
4.4 |
|
Living within my means and putting a little aside on a regular basis is my approach to saving. |
7.6 |
|
I believe in living within my means, that means saving up for things vs. going into debt. |
7.9 |
|
It seems every time I build up some savings, there’s something else I need or want, so I just end up spending it – it’s an ongoing cycle of spending and saving. |
5.2 |
|
Building and protecting my asset base is my main means of saving for the future. |
7.3 |
|
I’m happy to invest in high risk investments in order to get a better return. |
3.4 |
|
I have enough trouble meeting day to day expenses let alone putting money aside for the future. |
4.4 |
|
I’ve got my super sorted but aside from that I spend my money on anything I need or want. |
5.2 |
|
ALL RESPONDENTS |
(489) |
About AMP
AMP is a leading international financial services business, providing wealth management products and services to around 8 million customers worldwide. Principal activities include retirement savings, funds management, life and general insurance, financial planning and banking services. AMP operates in 16 markets around the world with a significant and efficient domestic presence in its three home markets of Australia, New Zealand and the UK. AMP has around 13,000 employees and planners worldwide, manages assets of more than NZ$292 billion and has market capitalisation of approximately NZ$18 billion.