Right fund, right contribution, don't panic

Even in times of uncertainty, it’s important we stay the course.

This was reinforced to me recently when we looked at what data from ANZ’s KiwiSaver members could tell us about the changing face of retirement.

I was struck by two things; firstly, instead of talking about retirement it might be more appropriate to talk about life after 65.

And secondly, people need to pay close attention to how much they will need to supplement NZ Super and support the lifestyle they want after turning 65.

For a while now, the way we’ve traditionally thought about retirement has been changing. We are living a lot longer and more people are working beyond the official retirement age of 65.

For some this is out of necessity, but for many working into their late sixties and seventies is a choice.

"The old notion of reaching 65 and putting your feet up is out of date for many. 65 is no longer the finish line, where work stops and retirement begins."

Fiona Mackenzie, Managing Director, Funds Management ANZ NZ

But what does the data tell us?

ANZ Investments manages more than a quarter of the KiwiSaver accounts of New Zealanders aged over 65. Data from those members shows that over two thirds of kiwis aren’t touching their KiwiSaver accounts when they become eligible at 65 years old.

Of the members of ANZ’s KiwiSaver schemes who became eligible to make a withdrawal in the 12 months to April 2022; 71% of our KiwiSaver members made no withdrawal, 17% made a partial withdrawal and 12% withdrew all their savings.

The figures also show 34% of members aged 66 to 75 and 11% of members aged over 75 are still making employee KiwiSaver contributions.

This confirms the old notion of reaching 65 and putting your feet up is out of date for many. 65 is no longer the finish line, where work stops and retirement begins.

Of course, retirement (or life after 65) looks different for everyone. I’ve met people who are set on stopping work to do something completely different - like taking up pottery. And we know for New Zealanders with health issues or those who do physical jobs working beyond 65 will be tough.

But for many working for longer can keep us in better shape mentally, physically and financially.

This brings me to my second point. Are people paying enough attention to what they will need to save to supplement NZ Super to support the lifestyle they want to enjoy after the age of 65?

Over the past four years the average balance for ANZ’s KiwiSaver members aged 65 or over has increased by almost 75%, and now sits at approximately $48,700. This compares to an average balance of just over $28,000 in 2018 and just over $20,000 in 2016.

The average balance for our male members aged over 65 is $52,600. For women aged 65 or older it is $43,600.

I should point out here, data can never tell a full story.

For some, their KiwiSaver fund will be their only investment. For others KiwiSaver will be just one part of a wider portfolio of investments (perhaps including property) that make up their retirement plan.

Members aged 65 or over will have only been in KiwiSaver since 2007 at the earliest. So they won’t have the decades to save that someone starting out now in their twenties will have.

I don’t want people to look at these numbers and give up. Saving and investing for the future is hard, particularly when your focus is on what is in front of you right now and there is so much uncertainty in all aspects of our lives.

But we do need to talk about it, so I hope these numbers spark a conversation and get people thinking about what sort of retirement they would like to have, and whether they are on track to achieve it financially.

Choosing the right KiwiSaver scheme is important. At ANZ Investments your KiwiSaver savings are looked after by some of the best investment managers in the business, with decades of experience.

We use our experience to monitor local and global markets to determine how much to invest in each asset class, with the aim of delivering strong performance over the long run.

ANZ’s team of qualified advisors can provide expert advice to support you on your financial journey.

It’s never too early to start saving for life after 65. But I think it’s never too late either.

At the very least we’d encourage people to make sure they’re in the right KiwiSaver fund for their age and risk appetite. And to make sure they are contributing enough.

And, when the markets go through a volatile period like they are right now – don’t panic, stick with your plan.

Think of this as right fund, right contribution, don’t panic.

ANZ New Zealand Investments Limited is the issuer and manager of the ANZ KiwiSaver Scheme, OneAnswer KiwiSaver Scheme and ANZ Default KiwiSaver Scheme.  A copy of the ANZ KiwiSaver Scheme and OneAnswer KiwiSaver Scheme guide and product disclosure statement is available at anz.co.nz.  The ANZ Default KiwiSaver Scheme is closed to new members.  This article is for information only. ANZ Bank New Zealand Limited’s financial advice provider disclosure is available at anz.co.nz/fapdisclosure.