It will be of little surprise to most New Zealanders that we are trailing our peers around the world regarding our savings levels, but the degree to which we’re at the back of the pack might.
Let’s take Australia as our closest comparable nation. There, a man’s average superannuation account (before Trump’s tariff wars ) was $111,853. Women’s balances were 38% below that, on average, at $68,499.
Here in Aotearoa, the average KiwiSaver fund is worth $42,664 for men and $34,185 for women, a 25% difference in gender. That fact that the gender divide here isn’t quite as bad as Australia’s is poor consolation.
Our overall savings rate for men, and women, sucks.
In my most recent NewstalkZB Smart Money segment (Listen Here), we discussed some reasons for this.
For starters, Aussie super savings rates are double—well, they will be in July this year when the contribution rate rises to 12% from 11.5%. Here, as you’ll be aware, the minimum is 3% employer and 3% employee, with the option for higher contribution rates among the workers.
Higher pay rates across the pond are also contributing to the savings gap with Australia.
Aussie super was introduced in 1992. KiwiSaver in 2007.
So what about further afield?
In the United Kingdom, retirement savings are estimated at around £126,285 for men and £82,719 for women.
It’s similar in the U.S., with a yawing gap between the genders.
The average Gen X male (defined as those born between 1965 and 1980) had USD $126,000 in their 401 account, and women had $45,000.
There’s a long way to go to readdress gender gaps, but the numbers overall reflect a screaming lack of preparedness for retirement in New Zealand.
Some financial advisors and retirement experts believe that whatever shortcoming we face here will be closed in part by NZ Super. I, for one, am not holding my breath there, given the well-signalled challenges to Governments worldwide struggling to cope with increasing health care costs, an ageing population, and too few taxpayers to support them.
We’re seeing governments push out the retirement age everywhere ~ except New Zealand ~ to smooth out demand.
While any proposal to move the age of retirement from 65 to 67 calls for a long, incremental phase-in, any discussion to date has been shut down by the Grey tsunami of super annuitants who fear their own entitlements would be impacted. They wouldn’t.
Unlike other countries I have lived in, there seems to be a quaint belief, or maybe it’s a faint hope, that the Government will look after you, no matter what.
The trouble with that notion is that it will leave those who don’t prepare adequately in the lurch if the bubble bursts on NZ Super’s sustainability. Even if it doesn’t end up being means or asset tested or disappear entirely, entitlement could dwindle. For those who do not have alternate savings, inheritances, or other safety nets, there is a lot at risk.
It is foolish to leave your future comfort in the hands of politicians, who 20 years from now will be scrambling to pay for crumbling infrastructure and spiralling health care costs.
Taking some steps today to protect your future is imperative.
In my latest newsletter, which you can sign up for here, I review five simple steps to manage your KiwiSaver and determine whether you’re on track.
