Only half of New Zealanders with a financial plan for retirement are confident it will meet their needs, according to a recent study commissioned by investment platform InvestNow.
The InvestNow Retirement Readiness Index (RRI), released as a biannual measure of retirement confidence, recorded an average confidence level of 50.4%. The index only reflects those with a retirement plan and does not include individuals who have not made financial preparations for retirement.
The research surveyed 801 InvestNow customers and 500 members of the general public, asking whether they had a retirement plan and, if so, how confident they were in its effectiveness.
“The findings suggest many New Zealanders are not well prepared for retirement, and many don’t expect to be, at least financially,” said InvestNow general manager Mike Heath.
The survey found that InvestNow customers were more likely to have a financial plan (78%) compared to the general public (47%). They also expressed higher confidence levels in their retirement planning, with 70% of InvestNow customers confident in their plans compared to just 19% of non-customers.
Additionally, 34% of respondents said they had no financial plan for retirement.
“If the majority of Kiwis do not have a retirement plan that they are confident in, that paints a fairly bleak picture for the lifestyles people will be forced to have in retirement,” Heath said.
He highlighted the importance of having a plan, putting it in a place as soon as possible, and reviewing and refining the plan, especially if personal circumstances change.
“It’s great to tuck money away, but if you haven’t thought about how much you actually need, or calculated how much you’ll end up with by retirement age, then it’s impossible to know if it’s enough or not,” Heath said.
The findings coincide with the latest “New Zealand Retirement Expenditure Guidelines,” published by Financial Advice New Zealand in collaboration with Massey University’s Financial Education and Research (Fin-Ed) Centre.
With Generation X nearing retirement and Millennials starting to engage with long-term financial planning, the report stressed the need for proactive saving and investment strategies.
One of the key focuses of the guidelines is estimating how much income and savings will be required to maintain a preferred retirement lifestyle. The data is used as a benchmark for financial professionals assisting clients with retirement planning.
The report also identified key financial risks in retirement, including the possibility of outliving savings. It outlined strategies to help retirees maintain financial stability, including diversifying income sources beyond New Zealand Superannuation.
Another concern highlighted in the report is inflation, which has contributed to rising costs for retirees. The report suggests that individuals factor in inflation when determining their long-term financial needs.
