Fund balances still short

WELLINGTON: THE average KiwiSaver balance of over65yearolds has risen in the past four years but still remains well short of what experts recommend for a comfortable retirement.

Figures from the ANZ — the country’s largest KiwiSaver provider — show balances have risen from an average of $20,000 in 2016 to $48,700 in the year to April 2022.

But that remains far short of Massey University New Zealand retirement expenditure guidelines, which recommend a oneperson household have a lump sum of $600,000 to live on in a metropolitan city and have choices in retirement.

For a comfortable provincial lifestyle the lump sum would be even higher at $688,000.

Even those expecting to live a nofrills lifestyle in the provinces would require a lump sum equivalent to $170,000.

ANZ managing director for funds management Fiona MacKenzie said it was encouraging to see that KiwiSaver balances were growing.

‘‘The data can’t tell us the whole story, but it is a good way of sparking a conversation and getting people to think about what sort of lifestyle they’d like to have after 65, and whether they are on track financially.’’

ANZ’s research also showed just over onethird (34%) of members who were aged between 66 and 75 and 11% of members over 75 were still making employee contributions to KiwiSaver, indicating they could still be working.

Employers do not have to contribute to KiwiSaver once a worker turns 65 but some continue to do so.

Ms MacKenzie said that people were living longer and more were working beyond the official retirement age.

‘‘For some this is out of necessity, but for many working into their late 60s and even 70s, this is a lifestyle choice.

‘‘Rather than talking about retirement, it might be more appropriate to talk about life after 65.’’

ANZ also found 71% of those who turned 65 in the year to April did not take any money out of their KiwiSaver account, while 17% made a partial withdrawal and 12% took out all of their savings.

People over the age of 65 can take their money out of KiwiSaver at any time.

Ms MacKenzie said keeping money in an unlocked KiwiSaver fund gave people a lot of flexibility.

‘‘They can contribute to, or withdraw their funds, at any time.’’

It was never too early to start planning for retirement even though it might seem a long time off, she said.

‘‘Right now we know that people are under pressure with increased costs of living.

‘‘Planning for retirement can seem daunting. But there are some really simple things people can do right now which will help set them up for the future.

‘‘You should make sure you are in a fund that suits your age and risk profile and also try to make regular contributions.’’