There is a general perception gap blindsiding New Zealanders’ financial management ability
New research from the Financial Services Council (FSC) has found that about 69% of women do not feel that they are financially ready for their retirement.
Richard Klipin (pictured), FSC’s CEO, said that about 56% of New Zealanders who were aged 18 or older were not financially prepared for retirement with the majority of them being women.
“Investing now means having financial security, which is critical for a dignified retirement, but the majority of Kiwis are on autopilot when it comes to planning for the future,” said Klipin.
According to the report, about 42% of New Zealanders contributed the minimum 3% and about 64% of employers matched it, which showed that many would not have sufficient KiwiSaver funds even for retirement plans that do not have any additional services.
“Although some will be prepared and have got advice from their provider or financial adviser, many just don’t know what they might need,” said Klipin.
FSC found that there was a general perception gap, which is created when confidence in financial decisions and understanding of financial concepts are mismatched, that blindsided New Zealanders when it comes to their ability to manage their finances for their needs in the short and long term.
There was a 20% gap between the number of New Zealanders who have financial confidence and those who have a real understanding about the four financial concepts.
“It’s a balancing act that is harder in today’s high interest environment. Kiwis are having to manage on less day-to-day and make trade-offs between living today and saving up for a comfortable tomorrow,” said Klipin.
“Working out where the trade-offs are means there are a bunch of pretty tricky decisions to be made, and we can be overconfident in our ability to make them.”
The FSC provided five tips to close one’s perception gap:
- Balance short-term day-to-day needs with a longer-term plan, you’ll be prepared and know where you are headed.
- Keep track of your finances and set a savings goal for your desired retirement lifestyle.
- Check your KiwiSaver settings and make sure you are in the right type of fund to help build your retirement pot.
- Find out how much you and your employer are contributing to your KiwiSaver and see if you can afford to sacrifice a little more today for your future retirement.
- Seek advice and get help and support now to close your perception gap, don’t wait until it’s too late.
“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,” said Klipin.
