Are you on track for retirement?

Many KiwiSaver members will get a glimpse into their possible future when they open their annual statements this month.  For the first time annual statements will contain an estimate of whether members may be on track for a comfortable retirement.

The statement will include a personalised estimate of what the member’s balance may be when they turn 65. It will be displayed as both a lump sum dollar figure and as a weekly income stream.

The weekly amount is calculated on the assumption that the member makes regular withdrawals until their balance reaches zero at the age of 90.

The information will be included on the statements for members aged between 18 and 64, and who have been a member of their KiwiSaver scheme for the year to 31 March 2020.

“It is an industry wide initiative that we hope will give people more understanding about their current financial position and what they are likely to have saved by the age of 65” said ANZ Managing Director Wealth & Private Bank Craig Mulholland.

“It’s a good opportunity to really take control of your KiwiSaver savings and consider whether you’re on track for the retirement you’re looking for."

Mark Davies, ANZ NZ, General Manager of Funds.

The figures are not a guarantee; but are an estimate designed to help people make an informed choice about their fund choice and the amount they are contributing.

The average projected balance for members of ANZ’s KiwiSaver schemes is $115,000, or an average weekly amount of $94. The current average age for these KiwiSaver members is 39 years.

But the projected balance for younger members is higher, with an average projected balance of just over $142,000 for members aged 18 to 29 years old.

For some people, their projected balance may come as a surprise – pleasant or otherwise.” says Mark Davies, ANZ NZ’s General Manager of Funds. “It’s a good opportunity to really take control of your KiwiSaver savings and consider whether you’re on track for the retirement you’re looking for.”

The figures do not include NZ Superannuation or any other retirement savings members might have. They will also have been impacted if a member was not contributing in the previous year or if they had made a withdrawal to buy a first home.

Three factors can make a big impact on the amount each of us will eventually save in KiwiSaver: our choice of fund, our contribution rate and the length of time we will continue contributing to our fund.

The projected amounts are based on people’s KiwiSaver balances at the end of March 2020 and their contributions during the year to 31 March 2020. The assumptions, which are set by the Government include a range of factors such as inflation, rates of return (after fees and tax), and assume that members take no savings suspensions or make any withdrawals.

“We hope the release of the annual statements will also remind members to review their fund and make sure they are in the right one for their age and risk profile” said Mr Davies.

“It’s important to remember that for most people KiwiSaver is a long-term investment. Movements in the market are part of investing” says Mr Davies. “The markets are recovering from the recent sell-off; so some investors who switched from a Growth to a Conservative fund in March might have locked in some investment losses.”

It is important people consider their own investment time frame and appetite for risk. A person nearing retirement or planning to buy their first home might have a different tolerance to risk than someone who is decades from their retirement.

“You want to stick to your long term savings plan. Everyone’s situation is different and things change over time. Your fund choice should be based on your personal circumstances, for example your investment goals, timeframe and how much risk you’re willing to take.”

ANZ’S online KiwiSaver account calculator gives people a more complete view of their possible retirement savings; and allows people to add other income and assets, and experiment with different contribution rates and fund types, to work out whether they’re on track to reach their retirement savings goals.

The account statements will be mailed out before June 15 and will also be available on ANZ Internet Banking and goMoney.