Keeping your trolley loadedPosted to Money Week Financial Capability on 05-09-2016
New research has revealed that many New Zealanders underestimate how much filling their shopping trolley in retirement will cost them. But they also don’t realise how well KiwiSaver could help them meet those bills.
The study was carried out for this year’s Money Week and is already motivating people to join KiwiSaver or add a little bit more to the amount they save each month.
People were asked to estimate how much they thought they would need for groceries over the 30 years they might spend in retirement. Only 11% guessed correctly at between $250k-$300k*.
They were also questioned about how much they would have in their KiwiSaver account if they saved at 3% from the age of 18**. The correct answer is between $300k-$400k. More than two thirds underestimated and nearly a third of those thought it would be less than $100k.
David Boyle, the Commission for Financial Capability’s group manager investor education, said: “If people realised how much they could end up with if they joined KiwiSaver and contributed regularly, then I think they would be much more likely to do so.”
When estimating how much they would have if they increased their KiwiSaver contribution rate from 3% to 8%, half expected it to be less than the correct answer of $600k-$700k.
Armed with that information, around half say they will now increase their KiwiSaver contributions; join KiwiSaver or look to join; start saving; or increase their savings. One per cent say they will stock up on groceries.
David added: “The great news is that we are living longer, many of us can now expect to spend 20-30 years in retirement. KiwiSaver makes it easier for us to save for our futures, the trick is to work out what we need to do to make sure our income lasts as long as we do once we stop working.
"It isn't easy to think about the daily costs in retirement, but Money Week focuses on helping people see things a little more clearly and, setting them up to start planning for it.
“We’re not suggesting anyone should stop enjoying themselves today, but work out a plan so you will be enjoying yourselves tomorrow as well. And the sooner you start putting a bit away, the greater the amount you will have to support you when you retire."
The theme for Money Week this year is ‘show me the money’ and looks at how the costs of everyday items can add up over 30 years of retirement.
Businesses, government, schools, community organisations and individuals are all getting involved in Money Week. The nationwide event features a range of activities, workshops and seminars to help build financial capability.
The Commission and Financial Markets Authority are running another survey during Money Week to help KiwiSaver members get the most out of their account - click here to take part.
The findings will be revealed on Thursday.
* Based in today’s dollars on Massey University Fin-Ed Centre New Zealand Retirement Expenditure Guidelines 2015, two person household, metro food expenditure choices, with no alcohol.
** Based on an average salary of $65,000 through a working life, contributions in a growth fund from age 18 to 65.
Next: Minister helps launch 2018 Money Week