Majority of Kiwi women not financially prepared for retirement – FSC

More than half of the population not financially ready

Majority of Kiwi women not financially prepared for retirement – FSC

Insurance News

By Kenneth Araullo

Recent research from the Financial Services Council (FSC) in New Zealand has highlighted a significant concern regarding retirement preparedness, particularly among women. The study, titled “Money & You,” reveals that 69% of women in New Zealand do not feel adequately prepared for their retirement years.

According to FSC CEO Richard Klipin, the issue extends beyond gender, impacting a substantial portion of the New Zealand population. An estimated 56% of New Zealanders aged 18 and above, equating to approximately 2.3 million individuals, are not financially ready for retirement. Klipin noted that a large number of these are women.

“Investing now means having financial security, which is critical for a dignified retirement, but the majority of Kiwis are on auto-pilot when it comes to planning for the future,” he said in a news release.

The report further detailed that 42% of New Zealanders contribute only the minimum 3% to their KiwiSaver accounts, a national voluntary long-term savings scheme. Additionally, it stated that 64% of employers match this minimum contribution. This trend indicates that many New Zealanders may not accumulate sufficient funds in their KiwiSaver accounts for a comfortable retirement.

“Although some will be prepared and have got advice from their provider or financial adviser, many just don’t know what they might need,” Klipin said.

What is the perception gap in New Zealand?

The FSC's research also identified a “perception gap” in financial management among New Zealanders, impacting their planning for both short-term and long-term financial needs. This gap arises from a discrepancy between individuals' confidence in their financial decision-making abilities and their actual understanding of financial concepts. This is particularly evident in complex decisions related to risk management, investment, and retirement planning.

The research indicates a 20% difference between the number of New Zealanders who believe they are financially confident (82%) and those who genuinely understand the four tested financial concepts (62%).

Klipin emphasised the complexity of financial planning, especially in the current environment of high interest rates. He said that New Zealanders face tough decisions in balancing their immediate living expenses with saving for the future. He suggested that overconfidence might be a factor in these challenging financial decisions.

“Finances can get complicated, so whether your concern is short-term cost of living or long-term investment and retirement planning, talk with whānau, your provider or an adviser and close your Perception Gap – it will help improve your financial confidence and wellbeing,” Klipin said.

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