New research commissioned by the Financial Services Council (FSC) has concluded that millennials are going to be ‘Generation Kiwisaver’, as they become more reliant on the savings scheme as their main source of income when planning for retirement.
Conducted by Horizon Research, the research focused on New Zealanders (2,199 respondents) aged 18-34 and their attitudes towards retirement planning.
It examined what they expected in their retirement, how this would be funded, and their confidence towards future planning.
“What we saw was an increasing reliance on KiwiSaver as a majority source of income in retirement planning, and a plea for more help with financial advice and retirement planning,” said FSC CEO, Richard Klipin.
Key points included:
- 54% of respondents aged 18-34 expected to have their own home
- 30% expected to have New Zealand Superannuation at retirement
- Under 35’s overwhelmingly support a law change to gradually lift the minimum contribution rate to KiwiSaver
- Generation KiwiSaver have a higher expectation on the income needed to retire than the primary working age group – 2% higher at $754 a week
“It’s clear that millennials are going to be Generation KiwiSaver. Owning a house and relying on New Zealand Superannuation are options younger New Zealanders simply aren’t counting on,” explained Klipin.
“This is a significant change from previous generations where a ‘she’ll be right’ attitude and owning a mortgage-free home was the extent of retirement planning for many,” he said.
He added that millennials’ push for a law change to gradually lift minimum contributions to KiwiSaver is a wake-up call for politicians about the need to keep on strengthening KiwiSaver.
“The research shows that millennials more than any other age group support financial advice being provided in new ways such as via robo-advice, and want a personalised financial plan,” he explained.
“So there is a clear wake-up call for industry about the importance of continuing to innovate and improve the ways in which financial advice is provided.
“And perhaps most importantly of all it’s a wake-up call for young New Zealanders to begin to diversify away from a pure KiwiSaver approach, and to start becoming more engaged with their KiwiSaver investment.”