Being debt free by retirement no longer silver bullet

Grim outlook for over 65s?

Being debt free by retirement no longer silver bullet

Kiwi retirees face the need to be extra cautious throughout their retirement - even if they manage to be debt-free by the time they turn 65. That’s the grim reality faced by New Zealanders in the years ahead according to a new survey commissioned by leading 50+ community website, GrownUps.

More than 600 Kiwis from the 50+ community revealed the state of their financial health in the GrownUps survey with results showing the economy is having a detrimental effect on the retirement plans of everyday New Zealanders. Almost 41 per cent of people are feeling worse with regards to their savings and financial situation than they were 12 months ago.

While 90 per cent of respondents plan to be debt free by the time they retire, nearly a quarter (22%) say they won’t be. A further 78 per cent said they will be debt free by the time they retire, however will still struggle to meet their living costs which is of real concern for the aging population of New Zealand Additionally, more than 75 per cent of respondents believe the government pension is not enough to cover their living costs, and a further 40 per cent of retirees do not believe they have enough money to last them through their retirement.

Richard Poole, co-founder of GrownUps says people are continually seeking new options to fund themselves through their retirement, such as living a more conservative lifestyle or downsizing their properties, which is becoming a crude reality for many, when before it was a choice due to the children leaving home.

“Of particular interest is the majority of respondents stating that they started saving for their retirement between the age of 40 to 45, which is quite early by most people’s standards The recommendation now, however, is that New Zealanders start saving for their retirement earlier during their 20s, or as soon as they start full-time employment. This is a real challenge for future generations as there are the costs associated with buying first homes, growing families and life experience to contend with – no one is thinking about retirement at 25.”

The survey found 36% of people had previously invested in a finance company with a concerning 40% of the companies invested in having gone into receivership in the last five years.

Of those surveyed, 41 per cent of New Zealanders plan to use KiwiSaver as their main source of retirement savings. Ninety percent of respondents opted into KiwiSaver out of choice, and more than 50 per cent of people contribute 4% of their annual income towards their KiwiSaver fund. A further 44 per cent of contributors plan to make voluntary contributions to their KiwiSaver funds.

Further information

• 45% of respondents are enrolled in KiwiSaver
• 46% of people plan to take their money out of KiwiSaver as soon as they turn 65
• 63% of people regularly check the balance of their KiwiSaver account
• 38% of respondents contribute 2% of their income to KiwiSaver fund annually
• 52% of respondents contribute 52% of their income to KiwiSaver fund annually
• 10% of respondents contribute 8% of their income to their KiwiSaver fund annually
• 66% of respondents own their home freehold
• 40% of respondents believe they will need up to $400,000 to last them for their retirement.
• 31% of respondents predict they will need up to $700,000 to last them for their retirement.

About GrownUps

GrownUps (www.grownups.co.nz ) is New Zealand’s only specific online social club and lifestyle magazine website for the 50+ community. GrownUps was initially set up in 2006 to service the rapidly growing group of internet savvy over-fifties and currently has around 70,000 members and over 140,000 visits per month. GrownUps has more than 5,000 articles and features covering everything from travel destinations, news and views, events, recipes, discussion boards, competitions, gardening and health tips.

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